On the Selection of Leading Economic Indicators for China
Ataman Ozyildirim () and
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Bill Adams: The Conference Board
Peter Bottelier: The Conference Board
Jing Sima-Friedman: The Conference Board
No 10-02, Economics Program Working Papers from The Conference Board, Economics Program
Leading indicators represent variables that tend to precede and predict coincident indicators of general economic activity, which as a multivariate concept, can be measured with the help of metrics on employment, production, total income and sales in real (inflation adjusted) terms. In many countries, composite indexes of leading economic indicators (LEI) are used to help predict short-term cyclical fluctuations of the economy in conjunction with composite indexes of coincident economic indicators (CEI). They also serve to analyze short-term macroeconomic dynamics of the business cycle. This paper reviews the available monthly and quarterly leading indicators for China, and develops a composite index following the indicators approach of The Conference Board, which publishes the U.S. LEI. Predicting turning points in the business cycle is extremely difficult, but the long history of research on leading indicators provides empirical evidence that LEIs can help in this task. This paper discusses our selection of leading indicators of the Chinese economy over 1986-2009. We evaluate our selection of leading indicators against the chronology of business and growth cycles.
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Persistent link: https://EconPapers.repec.org/RePEc:cnf:wpaper:1002
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