Another Look at the Ifo Business Cycle Clock

Klaus Abberger

Journal of Business Cycle Measurement and Analysis, 2006, vol. 2005, issue 3, 431-443

Abstract: Business tendency surveys are a popular instrument for business cycle analysis. The survey results are used to calculate leading business cycle indicators. For Germany the Ifo Institute publishes the Ifo business climate, which consists of the results of two questions: one question about the current situation of the respondents and a second question about their expectations for the coming months. The business climate combines the answers on both questions to a single indicator. This indicator is closely watched by the public. To visualize the interactions between the two components behind this indicator, the Ifo Institute developed a graphical representation called the Ifo business cycle clock. This article shows, with the help of circular-linear correlation analysis, that this illustration is indeed valuable. But it also shows that the clock times should be interpreted carefully.

Keywords: Leading indicator; Business tendency surveys; Business cycle; Circular-linear correlation (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (11)

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