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Current Economic Developments in View of the Ifo Economic Traffic Light

Author

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  • Klaus Abberger
  • Wolfgang Nierhaus

Abstract

Economic indicators should show the cyclical turning points of economic output reliably and with a statistically significant lead time. It must be constantly assessed whether the monthly change in an indicator signals a change in the economic cycle and thus an economic turning point, or whether it represents a continuation of the current cycle. The estimates provided by Markov-Switching models can provide key information when it comes to decision-making in this respect. The Ifo Business Climate for German trade and industry, the most important early indicator for the German economy, as well as the cyclical probabilities that are estimated based on it, can also be simulated using a Markov-Switching Model and the Ifo traffic light. The Ifo traffic light is currently signalling that the German economy reached an upper turning point in the third quarter of 2011.

Suggested Citation

  • Klaus Abberger & Wolfgang Nierhaus, 2011. "Current Economic Developments in View of the Ifo Economic Traffic Light," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 64(22), pages 36-38, November.
    • Handle: RePEc:ces:ifosdt:v:64:y:2011:i:22:p:36-38
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    File URL: https://www.ifo.de/DocDL/ifosd_2011_22_5.pdf
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    References listed on IDEAS

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    1. Klaus Abberger & Wolfgang Nierhaus, 2010. "Markov-Switching and the Ifo Business Climate: the Ifo Business Cycle Traffic Lights," OECD Journal: Journal of Business Cycle Measurement and Analysis, OECD Publishing, Centre for International Research on Economic Tendency Surveys, vol. 2010(2), pages 1-13.
    2. Michael ARTIS & Massimiliano MARCELLINO & Tommaso PROIETTI, 2002. "Dating the Euro Area Business Cycle," Economics Working Papers ECO2002/24, European University Institute.
    3. Klaus Abberger & Wolfgang Nierhaus, 2008. "Markov Switching and the Ifo Business Climate," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 61(10), pages 25-30, May.
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    Cited by:

    1. Wolfgang Nierhaus & Klaus Abberger, 2015. "ifo Konjunkturampel Revisited," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 68(05), pages 27-32, March.
    2. Wolfgang Nierhaus & Timo Wollmershäuser, 2016. "ifo Konjunkturumfragen und Konjunkturanalyse: Band II," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 72.

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    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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