A Dynamic Factor Model for Nowcasting Household Consumption

A Dynamic Factor Model (DFM) is one of the time series models that can be used to forecast within a very short period in future known as nowcasting. This model accommodate frequency difference exists between monthly explanatory variables and response variable which measured quarterly. has been commonly economics especially household consumption for purpose constructing economic policies. The condition country reflected country's Gross Domestic Product (GDP). Consumption an important component GDP because its large proportion GDP. One activities meet various needs goods services referred consumption. paper discusses DFM based on varimax quartimax rotations. results show both rotational methods transmitting with same precision.