The small open hypothesis suggests that small open economies are crucially affected by foreign economic activity. This study compares the predictive content of traditional financial variables and foreign economic activity for forecasting GDP growth in seven European small open economies during...

A substantial body of stylized facts and empirical evidence exists regarding the relationships between financial variables and the macroeconomy in the United States. However, the question of whether this evidence is consistent with the cases of small open economies is less known. This paper...