Transcript A business cycle clock (BCC) in Korea (R.O.K.)

Statistics
KOREA
Introduction
A Process of Developing BCC
The composition of BCC
Examples of BCC utilization
Unique features of BCC
Ⅰ. Introduction
Need of users
People, not only economists but also ordinary people, want to
know Business Cycle more easily, even though R.O.K provides
Composite Economic Index.
Statistics Korea
Needs a device to induce people’s interest in statistics and to support
user’s economic analysis.
Statistics Korea developed BCC which showed a
visualized business trend and could be more easily
understood than Composite Economic Index (CEI).
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Ⅱ. A Process of Developing BCC
1
Making T/F Team
BCC development was performed by collaboration
Economic
Statistics
Bureau
 Planning and studying Calculation
method
Statistics
Information
Bureau
 DB construction and management
4
Overseas Cases
2
Statistics
Netherlands
Statistisches
Bundesamt
Deutschland
EUROSTAT
OECD
Name
Business Cycle
Tracer
Business Cycle
Monitor
Business Cycle Clock
Business Cycle Clock
Reference nation
Home country
Home country
34 countries and EU15,
EU25, etc.
34 countries including
OECD member and Euro
Area, OECD-Total, etc.
Number of
indicator
15
12
15
4
Main screen
dot
dot
dot
trace
- Link to DB
․Original series
․TC
․Trend
․Cycle
․SA
․MoM of SA
․YoY of original series
Link to OECD Stats
․SA
․MoM of SA
․YoY of original series
X
Table
X
Chart
Cycle
Cycle
Narration
O
X
X
X
Filtering
HP filter
HP filter
CF filter
HP filter
Addit
ional
functi
on
5
3
The criteria for indicators determined
1 The criteria for individual indicators
Strong theoretical grounds for inclusion
A sufficiently strong and timely relation with the
business cycle
Timely detection of major turning points in the
business cycle
If possible, related to the general business cycle
A sufficiently long time series available
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2 The criteria for the indicator set as a whole
All major aspects of the economy should be
represented
The set should be balanced. One aspect of the economy
or one type of indicator should not dominate the
Business Cycle Clock
The whole system should be roughly coincident
with the business cycle
Major turning points in the cycle should be timely
and reliably detected
7
3 Ten key economic indicators selected
Economic Sector
Indicator
Frequency
Industrial Production Index
Monthly
Service Industry Activity Index
Monthly
Consumer Goods Sales Index
Monthly
Index of Equipment Investment
Monthly
Value of Construction Completed (Real)
Monthly
Exports (Real)
Monthly
Imports (Real)
Monthly
Number of Employed Persons
Monthly
Business survey Index (manufacturing)
Monthly
Consumer Expectation Index
Monthly
Production
Consumption
Investment
Trade
Labor market
Sentiment
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4 A method of cycle extraction
 Considering some points for cycle extracting method
small revision as monthly data added
identifying turning point early
stability of identified turning point
 Reviewing filtering methods
PAT, single HP, double HP, CF
 Adopting ‘Double HP’ for our BCC.
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< Reference 1 : Schedule of Developing BCC >
’08. 12
 Development examination of BCC
’09. 2 ~ 3
 Bidding and ordering
’09. 4 ~ 6
 Investigate BCC development ·operating
status of 4 euro institute
 Design main screen
 Indicator selection and compute cycle
’09. 7 ~ 9
 Implementation of BCC
 Hearing opinion of internal and external expert
’09. 10
 Pilot operation
’09. 12
 Public service
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Ⅲ . The composition of Business Cycle Clock
1 2
3 4
5 6 7 8
9
10
11
1
To the beginning of timeline
2
Previous month
3
Next month
4
To the end of timeline
5
Play animation (backward)
6
Play animation (forward)
7
Stop
8
Repeat
9
Increase/decrease
animation speed
10
Show grid
11
Trace length
11
Ⅳ. Example of BCC utilization
1
A case of 2008 – 2009 Financial Crisis
 During the global financial crisis in the
second half of 2008, we can see how BCC
represents the economic situation.
 The movement of BCC showed that
key indicators headed for the trough.
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08 / 2008
09
10
07
4
above trend
above trend
expansion
downturn
3
2
1
-1
- 0.8
- 0.6
- 0.4
- 0.2
0
0.2
0.4
0.6
0.8
1
-1
-2
-3
slowdown
below trend
-4 below trend
recovery
13
 After global financial crisis in the first half of 2009,
the movement of BCC was passing the trough toward
recovery, and Composite Economic Index also showed
the recovery.
14
04 / 2009
05
06
03
4
above trend
above trend
expansion
downturn
3
2
1
-1
- 0.8
- 0.6
- 0.4
- 0.2
0
0.2
0.4
0.6
0.8
1
-1
-2
-3
slowdown
below trend
-4 below trend
recovery
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2 The current economic situation
Most indicators in Korea are located in the green and orange
quadrant at Dec. 2010
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3 The track function
A better view on how the cycle
has been moving and how long
cycles last
Industrial Production Index
Service Industry
Production Index
Retail Sales Index
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Ⅴ. Unique features of BCC
1
Previous reference date available
The picture of the previous reference date of an economy
is available on the Business Cycle Clock
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< Reference 2 : What is Reference Dates of Business Cycle >
Represent important turning points on
expansion and contraction in the aggregate
economic activity of a nation.
Useful for historical analysis of business cycle
Used to assess the economic policies and
co-movement of economic indicators
Used to test the business cycle
behavior and to study the characteristics
of economic movements
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< Reference 3 : The Reference Dates of Business Cycle of Korea >
Reference Date
Cycle
Duration (Month)
Trough
Peak
Trough
Expansion
Contraction
Total
1st
1972. 3
1974. 2
1975. 6
23
16
39
2nd
1975. 6
1979. 2
1980. 9
44
19
63
3rd
1980. 9
1984. 2
1985. 9
41
19
60
4th
1985. 9
1988. 1
1989. 7
28
18
46
5th
1989. 7
1992. 1
1993. 1
30
12
42
6th
1993. 1
1996. 3
1998. 8
38
29
67
7th
1998. 8
2000. 8
2001. 7
24
11
35
8th
2001. 7
2002.12
2005. 4
17
28
45
9th
2005. 4
2008. 1
2009. 2
33
13
46
10th
2009. 2
Average
-
-
-
31
18
49
20
2
Relationship between CEI and BCC
Statistics Korea provides the Composite Economic Index
(CEI) as well as Business Cycle Clock
The Composite Leading Index, Coincident Index, and
Lagging Index which are announced monthly
The cyclical component of the Composite Coincident
Index and the 12 month smoothed change in the
Composite Leading Index are released
The Leading and Coincident diffusion indexes are compiled
internally and they are used to check economic conditions
and identify turning points complementarily.
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The composite Economic Index showed almost the same
trend as that of BCC.
4
4
둔화
4
둔화
상승
상승
둔화
상승
3
3
2
2
1
1
3
2
1
0
0
0
-1
-0.8
-0.6
-0.4
- 0.2
0
0.2
0.4
0.6
0.8
-1
1
-0.8
-0.6
-0.4
- 0.2
0
0.2
0.4
0.6
0.8
1
-1
-0.8
-0.6
-0.4
- 0.2
-1
0
0.2
0.4
0.6
0.8
1
-1
-1
-2
-2
-2
-3
하강
-3
하강
회복
회복
하강
회복
-3
-4
-4
-4
C
4
둔화
상승
3
2
4
1
둔화
상승
B
0
D
3
-1
-0.8
2
-0.6
-0.4
- 0.2
0
0.2
0.4
0.6
0.8
1
-1
1
-2
0
-1
-0.8
-0.6
-0.4
- 0.2
0
0.2
0.4
0.6
0.8
하강
1
-3
회복
-4
-1
-2
A
하강
-3
E
회복
-4
98
99
00
01
02
03
04
05
06
07
08
09
10
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