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Dating and Exploration of the Business Cycle in Iceland

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  • Wolfgang Polasek

    ()
    ( Institute for Advanced Studies, IHS Vienna; RCEA Rimini, Italy)

Abstract

The paper explores the quarterly sequence of business cycles in Iceland for 40 years between 1970 and 2009 using the business cycle technique of Leamer (2009). We apply first a turning point (TP) dating identification procedure based on the Hendrick- Prescott (HP) filter of the quarterly growth rates of GDP and then we use different candidates for leading indicators for turning points. We find that the Iceland economy has a rather short business cycle of about 3 years and most macroeconomic indicators are in accordance with the business cycles. Only a few indicators have a predictive potential, some variables like consumption show a one quarter lag. Furthermore, we apply the concept of abnormal contributions to growth for candidates as a leading indicator of turning points. We find that over the last decade there is some evidence that abnormal growth contributions are better indicators for troughs than for peaks.

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Bibliographic Info

Paper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 13_10.

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Date of creation: Jan 2010
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Handle: RePEc:rim:rimwps:13_10

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Related research

Keywords: Business Cycle dating; HP filtering; exploratory turning point analysis; lead and lag indicators; abnormal growth contributions; gross domestic product (GDP) growth;

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  1. Hong, Kiseok & Tornell, Aaron, 2005. "Recovery from a currency crisis: some stylized facts," Journal of Development Economics, Elsevier, vol. 76(1), pages 71-96, February.
  2. Kaminsky, Graciela L. & Reinhart, Carmen M., 2000. "On crises, contagion, and confusion," Journal of International Economics, Elsevier, vol. 51(1), pages 145-168, June.
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Cited by:
  1. Wong, Shirly Siew-Ling & Puah, Chin-Hong & Abu Mansor, Shazali & Liew, Venus Khim-Sen, 2012. "Early warning indicator of economic vulnerability," MPRA Paper 39944, University Library of Munich, Germany.
  2. Wong, Shirly Siew-Ling & Abu Mansor, Shazali & Puah, Chin-Hong & Liew, Venus Khim-Sen, 2012. "Forecasting malaysian business cycle movement: empirical evidence from composite leading indicator," MPRA Paper 36649, University Library of Munich, Germany.

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