Forecasting Foreign Trade with Leading Indicators

Abstract

When the National Bureau of Economic Research began the International Economic Indicator project in 1973 we had two initial objectives. The first was to test the feasibility of employing traditional NBER methods to identify growth cycles in a number of market-oriented economies. The second objective was to see whether the Ieading, roughly coincident, and lagging indicators, which had proved reliable in analyzing business cycles in the United States, would prove equally useful in analyzing growth cycles in the United States and abroad. Our paper at the 1975 CIRE.T meetings in Stockholm, as well as other reports, demonstrated that the NBER indicators can be adapted to both these purposes, and we are now engaged in developing a system for monitoring international instability along these lines. In this endeavor we are cooperating with the OECD in establishing a current data bank which we trust will prove helpful for many purposes in all the countries that ultimately can be included.

Philip A. Klein is on the staff of the National Bureau of Economic Research and Professor of Economics at Pennsylvania State University. Geoffrey H. Moore is Director of Business Cycle Research at the National Bureau and Senior Research Fellow, Hoover Institution, Stanford University. In the research underlying this paper we have had the able assistance of Walter W. Ebanks, research associate at the National Bureau. We are indebted to Chantal Dubrin, Jean Maltz and Elizabeth Wehle for their careful statistical work. The research has been supported by funds from the U.S. Departments of State, Treasury, Commerce, Labor, and Agriculture, The Federal Reserve System, and several American corporations.