This paper uses a normative method to compare the performance of the composite leading economic indicators (CLI) after the measure was revised by the Conference Board in 1996 and 2001 with its prior design to check for a claim that the new design improves its performance in predicting a downturn in the U.S. economy. A comparison of the Bayesian probability forecasts of a downturn for these two designs has shown that the two consecutive post-1996 CLIs have the same amount of information as the four consecutive CLIs of the prior design for correctly predicting/detecting a recession in the U.S. economy, with no false alarm. This finding supports the Conference Board’s claim.
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Article provided by Department of Economics, Delhi School of Economics in its journal Indian Economic Review.
Volume (Year): 36 (2001) Issue (Month): 1 (January) Pages: 205-213 Download reference. The following formats are available: HTML
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