Ven-ICE: a new indicator for the economy of the Veneto region

In the absence of timely quarterly information about regional GDP dynamics, this work establishes a new indicator of economic activity for the Veneto region, providing a monthly real-time estimation of the medium- and long-term dynamics of regional GDP. The methodology is based on the use of a Generalized Dynamic Factor Model to extract a few common components from about 120 local time series at monthly or quarterly frequency. Therefore, this indicator exploits the large amount of information available at local level: the official Istat statistics, the financial statistics provided by the Bank of Italy, and the many statistics produced by trade associations and by the local governments in the Veneto region. The model makes it possible to flexibly manage the many regional time series and to estimate the dynamics of regional economic activity with a three-month delay, instead of the twelve-month delay of Istat’s annual regional economic accounts.