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Assessing Malaysia’s Business Cycle indicators

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  • Michael Meow-Chung Yap

Abstract

An empirical assessment shows that Malaysia’s business cycle indicators can be improved. Turning point detection is not impressive, especially for troughs. Lead times are also variable. However, the relationship between the leading and coincident indicators over the entire cycle shows quite strong correlations from the late 1980s onwards, although lead times have shortened. Empirical evidence is very strong that the leading index Granger-causes the coincident index. Business and consumer confidence surveys also show much promise in improving prediction of the reference cycle. However, implications of the changing economic structure on the performance of the leading index needs to be fully taken into account, especially the emergence of new services sector activities.

Suggested Citation

  • Michael Meow-Chung Yap, 2009. "Assessing Malaysia’s Business Cycle indicators," Monash Economics Working Papers 04-09, Monash University, Department of Economics.
    • Handle: RePEc:mos:moswps:2009-04
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    File URL: http://www.buseco.monash.edu.au/eco/research/papers/2009/0409assessingmalaysiayap.pdf
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    References listed on IDEAS

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    1. Athanasios Orphanides & Simon van Norden, 2002. "The Unreliability of Output-Gap Estimates in Real Time," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 569-583, November.
    2. Layton, Allan P, 1986. "A Causality Analysis of Australia's Growth Cycle and the Composite Index of Leading Indicators," Australian Economic Papers, Wiley Blackwell, vol. 25(46), pages 57-66, June.
    3. Robert H. McGuckin & Ataman Ozyildirim & Victor Zarnowitz, 2000. "The Composite Index of Leading Economic Indicators: How to Make it More Timely," Economics Program Working Papers 00-04, The Conference Board, Economics Program.
    4. Lawrence J. Christiano & Terry J. Fitzgerald, 2003. "The Band Pass Filter," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 435-465, May.
    5. Auerbach, Alan J, 1982. "The Index of Leading Indicators: "Measurement without Theory," Thirty-Five Years Later," The Review of Economics and Statistics, MIT Press, vol. 64(4), pages 589-595, November.
    6. Marianne Baxter & Robert G. King, 1999. "Measuring Business Cycles: Approximate Band-Pass Filters For Economic Time Series," The Review of Economics and Statistics, MIT Press, vol. 81(4), pages 575-593, November.
    7. Mr. Joannes Mongardini & Tahsin Saadi Sedik, 2003. "Estimating Indexes of Coincident and Leading Indicators: An Application to Jordan," IMF Working Papers 2003/170, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Shirly Siew-Ling Wong & Toh-Hao Tan & Shazali Abu Mansor & Venus Khim-Sen Liew, 2018. "Rethinking and Moving Beyond GDP: A New Measure of Sarawak Economy Panorama," International Business Research, Canadian Center of Science and Education, vol. 11(12), pages 127-133, December.
    2. Shirly Siew-Ling WONG & Chin-Hong PUAH & Shazali ABU MANSOR & Venus Khim-Sen LIEW, 2016. "Measuring Business Cycle Fluctuations: An Alternative Precursor To Economic Crises," ECONOMIC COMPUTATION AND ECONOMIC CYBERNETICS STUDIES AND RESEARCH, Faculty of Economic Cybernetics, Statistics and Informatics, vol. 50(4), pages 235-248.
    3. 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.

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    More about this item

    Keywords

    Business/growth cycle; Malaysian economy; growth cycle chronology; turning point analysis; Granger causality;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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