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Comparing sentiment and behavioral based leading indexes for industrial production in Germany: A novel running local test


  • Yunus Yilmaz

    (Ruhr-Universität Bochum, faculty of management and economics)

  • Knut Lehre Seip

    (Oslo and Akershus University College for Applied Sciences)

  • Michael Schröder

    (Centre for European Economic Research (ZEW))


We use a novel method to compare two survey based leading indexes and two behavioral based index to industrial production, IP, Germany 1991-2015 . The sentiment based ifo – index (managers) performs best in predicting the general changes in IP (-0.596, -1.0 being best). The ZEW – index (financial experts) is close (-0.583), and is better in predicting 6 recessions and 5 recoveries. On a third place comes, somewhat unexpectedly, the unemployment index (-0.564) and lastly comes order flow, OF (-0.186). The four indexes all scored low during time windows around 1997 and 2005. Both periods correspond to anomalous episodes in German economy.

Suggested Citation

  • Yunus Yilmaz & Knut Lehre Seip & Michael Schröder, 2017. "Comparing sentiment and behavioral based leading indexes for industrial production in Germany: A novel running local test," Working Papers 201707, Oslo Metropolitan University, Oslo Business School.
  • Handle: RePEc:oml:wpaper:201707

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    Leading indexes; industrial production; prediction skill; survey based indexes; Germany;
    All these keywords.

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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