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An Application of the Indicator Approach to Developing Coincident and Leading Economic Indexes for India

In: Business Cycles in BRICS

Author

Listed:
  • Atish Kumar Dash

    (Central University of South Bihar)

  • Ataman Ozyildirim

    (The Conference Board Inc.)

  • Jing Sima-Friedman

    (The Conference Board Inc.)

Abstract

Business cycle analysis relying on composite indexes provides an understanding of the direction of the economic activity in market economies that is essential for macroeconomic policy formulation and decision making. With the liberalization of the Indian economy since 1991, studies on business cycle for India have received renewed attention in the context of a developing market economy. In this chapter, we describe our proposed business cycle indicators, particularly coincident and leading indicators, that provide tools for tracking and anticipating cyclical movements following The Conference Board’s indicator approach. This approach which is focused on classical business cycles differs from other studies that develop cyclical indicators following growth rate cycles or growth cycles. We begin by proposing a coincident economic index (CEI) that can be used to describe the historical development of the Indian business cycle since 1990. We show that by taking a broad definition of economic activity and the consensus of cyclical movements among several coincident indicators we can obtain a reliable chronology of the reference cycle. We also discuss how this index of coincident indicators can be used to determine a growth cycle chronology. Then, we review a number of leading indicators and propose the selection of indicators as components of a leading economic index (LEI) that help to anticipate the turning points in the business cycle of India’s economy.

Suggested Citation

  • Atish Kumar Dash & Ataman Ozyildirim & Jing Sima-Friedman, 2019. "An Application of the Indicator Approach to Developing Coincident and Leading Economic Indexes for India," Societies and Political Orders in Transition, in: Sergey Smirnov & Ataman Ozyildirim & Paulo Picchetti (ed.), Business Cycles in BRICS, pages 377-392, Springer.
    • Handle: RePEc:spr:socchp:978-3-319-90017-9_23
    DOI: 10.1007/978-3-319-90017-9_23
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    More about this item

    Keywords

    Trends; Cycles and turning points; Coincident and leading economic indicators;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • P24 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation

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