Sparse structures with LASSO through principal components: Forecasting GDP components in the short-run

This paper examines the use of sparse methods to forecast the real (in the chain-linked volume sense) expenditure components of the US and EU GDP in the short-run sooner than national statistics institutions officially release the data. We estimate current-quarter nowcasts, along with one- and two-quarter forecasts, by bridging quarterly data with available monthly information announced with a much smaller delay. We solve the high-dimensionality problem of monthly datasets by assuming sparse structures of leading indicators capable of adequately explaining the dynamics of the analyzed data. For variable selection and estimation of the forecasts, we use LASSO together with its recent modifications. We propose an adjustment that combines LASSO cases with principal components analysis to improve the forecasting performance. We evaluated the forecasting performance by conducting pseudo-real-time experiments for gross fixed capital formation, private consumption, imports, and exports over a sample from 2005–2019, compared with benchmark ARMA and factor models. The main results suggest that sparse methods can outperform the benchmarks and identify reasonable subsets of explanatory variables. The proposed combination of LASSO and principal components further improves the forecast accuracy.     

Global operations networks in motion: Managing configurations and capabilities

In the past, the ‘Made in the World’ label, although capturing what may lie ahead, seemed awkward and futuristic. Today, it has become a reality. An ample array of global products are built up of numerous components and modules manufactured by global networks of differentiated partners rather than within the boundaries of one national entity. The purpose of this paper is to contribute to bridging the empirical gap in the area of global operations networks and provide insights into how they change over time. The paper is based on the cases of three Danish companies and their global operations networks. It finds a number of common patterns highlighting organizational effects and managerial challenges faced by the companies regarding rapid changes in their networks configurations and capabilities. The paper details the variables determining these changes and suggests how the on-going interplay between the focal organization, its network partners, and their varying contextual conditions can be dealt with.