A state-space approach for measuring regional manufacturing production indices

In this research note we propose a latent variable model in the spirit of I srailevich and Kuttner (1993) to measure regional manufacturing production. In order to test the validity of the proposed methodology, we apply it for those Spanish regions that have a direct quantitative index. The results d emonstrate the accuracy of the methodology proposed and show that it can ov ercome some of the difficulties of the indirect method applied by the INE, the Spanish National Institute of Statistics.