83

This research paper explores the role of unemployment in improving gross domestic product (GDP) growth forecasting reliability by using vector autoregressive (VAR) models, with a particular focus on mixed frequency Bayesian VAR (MF-BVAR) models. It also examines how key economic variables, which are largely employed by central banks, are included, such as GDP, money supply (M1), inflation, short-term interest rates, and unemployment. By incorporating unemployment data, the study aims to improve the accuracy of GDP forecasts. The findings highlight the significant impact of unemployment on economic indicators and the overall accuracy of the forecasting models. This research contributes to economic forecasting literature by demonstrating the value of considering labor market dynamics in predictive models and offers valuable insights for policymakers and economists. JEL classification: C53, E24, E58.