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Leading Indicators for the British Economy

Published online by Cambridge University Press:  26 March 2020

C. Drakatos
C. Drakatos*
Affiliation:
Economic Research Department of the Bank of Greece
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Extract

One method of short-term economic forecasting is the use of indicators which normally change direction in advance of business activity as a whole. This method has been extensively developed over many years, with some success, by the National Bureau of Economic Research in the United States. In the present article we have explored the possibility of finding such a set of leading indicators for the British economy, with special reference to post-war movements.

Type
Articles
Information
National Institute Economic Review , Volume 24 , May 1963 , pp. 42 - 49
Copyright
Copyright © 1963 National Institute of Economic and Social Research

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Footnotes

It is based on a doctoral thesis written at the London School of Economics.

References

page 42 note (1) American experience is reported at length in Business Cycle Indicators, edited by Geoffrey H. Moore, Princeton University Press, two volumes, 1961.

page 44 note (1) The selection was made by using probability measures which are briefly described in the Appendix.

page 44 note (2) The lead fell substantially in the case of the index of security prices, from 14.8 months in the pre-war period to 4.7 months in the post-war period.

page 44 note (3) The tests applied are briefly discussed in the Appendix.

page 45 note (1) This series is based on annual company reports. The more up-to-date figures of quarterly profits published by the CSO have not been running long enough to be subjected to the type of analysis used here. The same applies to a number of other series which have become available in the last few years.

page 45 note (2) The roughly coinciding group of indicators was chosen in the same way as the group of leading indicators.

page 45 note (3) For method of construction see Appendix.

page 45 note (4) For this purpose all the series (leading, lagging and roughly coinciding) were taken.

page 46 note (1) After making the best allowance possible for the effects of the very cold weather.

page 46 note (2) For example, the changes in producers' stocks of steel may reflect still earlier changes in consumption of steel, or in orders received; but steel consumption figures are available only at 6-monthly intervals over most of the period covered and steel orders are not published at all.

page 48 note (1) G. H. Moore, ‘Statistical indicators of cyclical revivals and recessions’, Business Cycle Indicators, edited by G. H. Moore, Princeton University Press 1961, vol. 1, pages 206-7.

page 49 note (1) For convenience, the cyclical factor is combined with the trend in this analysis.