business cycles

definitions

business cycle refers to the fluctuations in the over all level or pace of economic activity

elements

trough expansion

upswing

peak

contraction

a full cycle in total economic activity is called a reference cycle

determining the points of the reference cycle

cross sectional data

panel data

time series

set of observations of a phenomenon taken at different points in time

data organised according to criteria such other than time such as gender age or location.

combination of time series data and cross sectional data by pooling the two types of data

types of variations

seasonal variations

random variations

cyclical variations or cycles

trend

the elimination of of the seasonal variation in a time series is called seasonal adjustment.

possible method estimating turning points

analyze as many time series as possible. isolate the cyclical component. combine to form a general picture of the business cycle. these turning points are called reference turning points or reference dates

reference turning points are determined

collect all available times series

if necessary, first adjust for factors such as price changes and the number of working days

analyse and isolate the cyclical component and determine turning points

assemble information of specific turning points to determine reference turning points.

clustering of turning points involves using a large number of specific turning points to represent all the economic sectors

diffusion index

specific cycle is a full cycle exhibited by individual time series

business cycle indicators

leading, coincident and lagging indicators

other approaches to forecasting

single variable extrapolation

anticipation surveys

consensus of observers approach

econometric models