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Compiling Cyclical Composite Indexes: The Conference Board Indicators Approach

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Business Cycles in BRICS

Part of the book series: Societies and Political Orders in Transition ((SOCPOT))

Abstract

This chapter presents the indicator approach to business cycle analysis followed by The Conference Board and others around the world. It reviews the utilization of turning point analysis in the indicator selection process. The composite index methodology, its major concepts, assumptions, and the empirical challenges faced in applying the indicator approach are discussed.

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Notes

  1. 1.

    For a discussion of timeliness of business cycle indicators and the importance of real-time indicators, see McGuckin et al. (2007).

  2. 2.

    For comprehensive review of how cyclical indicators and composite indexes were developed and evolved, see Klein (1999a, b) and Zarnowitz (1992, Chaps. 10 and 11). See also Zarnowitz and Boschan (1975) and Zarnowitz (2001).

  3. 3.

    See Subsect. 2.3.

  4. 4.

    See The Conference Board website at https://www.conference-board.org/data/bci/index.cfm?id=2154 and The Conference Board (TCB) 2001. Business Cycle Indicators Handbook. The Conference Board: New York, pp. 47–55. See also Ozyildirim (2017).

  5. 5.

    This section is adapted from The Conference Board index methodology. Please visit the website for the latest documentation: https://www.conference-board.org/data/bci.cfm

  6. 6.

    If the component is a diffusion index, then it is first normalized by subtracting the sample mean and dividing by the standard deviation.

  7. 7.

    The indexes are updated for the latest and previous 6 months of data using the predetermined factors from the sample period. Revisions in the components that fall outside of the moving 6-month window are not incorporated in the index until the entire index is recomputed.

  8. 8.

    See The Conference Board (2001, pp. 56–57). See also Zarnowitz and Boschan (1975), Klein (1999a, b), and McGuckin and Ozyildirim (2004).

References

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Author information

Authors and Affiliations

  1. The Conference Board Inc., New York, NY, USA

    Ataman Ozyildirim

Authors
  1. Ataman Ozyildirim
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Correspondence to Ataman Ozyildirim .

Editor information

Editors and Affiliations

  1. Higher School of Economics, National Research University, Moscow, Russia

    Sergey Smirnov

  2. The Conference Board Inc., New York, NY, USA

    Ataman Ozyildirim

  3. Fundação Getulio Vargas, Brazil/IBRE/São Paulo School of Economics, São Paulo, Brazil

    Paulo Picchetti

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Ozyildirim, A. (2019). Compiling Cyclical Composite Indexes: The Conference Board Indicators Approach. In: Smirnov, S., Ozyildirim, A., Picchetti, P. (eds) Business Cycles in BRICS. Societies and Political Orders in Transition. Springer, Cham. https://doi.org/10.1007/978-3-319-90017-9_17

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