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International interdependence of business cycles in the manufacturing industry: The use of leading indicators for forecasting and analysis
Author(s) -
Berk J. M.,
Bikker J. A.
Publication year - 1995
Publication title -
journal of forecasting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.543
H-Index - 59
eISSN - 1099-131X
pISSN - 0277-6693
DOI - 10.1002/for.3980140102
Subject(s) - lagging , business cycle , economic indicator , predictive power , economics , composite indicator , international business , business , econometrics , macroeconomics , medicine , philosophy , management , epistemology , pathology
This article introduces new leading indicators for fifteen industrialized countries which enable the business cycle in manufacturing to be forecast fairly reliably between 4 and 6 months ahead. These indicators are based on an improved variant of the NBER method, yielding a composite leading indicator characterized by less erratic movements and clear turning points. The indicators are used to explore the international interdependence of business cycles and to examine the degree to which this interdependence is affected by growing economic integration, as in the EC. For each of the countries studied, the various foreign economies affecting the local business climate are identified. Since the business cycles of some countries clearly lead those of others, this international interdependence can be used to further improve the predictive power of the leading indicators in the lagging countries.