RDP 2025-06: An AI-powered Tool for Central Bank Business Liaisons: Quantitative Indicators and On-demand Insights from Firms Appendix D: Variable Selection in the Lasso Model

Nicholas Gray, Finn Lattimore, Kate McLoughlin and Callan Windsor

August 2025

Figure D1: Variables Selected for Nowcasting
Per cent of nowcasts that select the variable, lasso specification
Figure D1: Variables Selected for Nowcasting - Horizontal bar graph showing the percentage of times different variables were selected for nowcasting. The variables are coloured using three categories: Text based, Baseline and Staff scores. The graph highlights that only a small group of variables were consistently selected in most periods (such as inflation expectation, expected wages staff scores and the LM-based labour topic exposure measure), with many variables never being selected in any period.

Sources: Authors' calculations; RBA.