Business cycle analysis and composite indicators

Performing Business cycle analysis and constructing composite indicators to measure cyclical movement or complex phenomena has been considered for decades within the scope of statistical offices or, better, borderline topics.

Recently, the situation has started to change. As a consequence of the financial and economic crisis and thanks to the joined actions of Eurostat and UNSD, statistical institutions have become more open to the development of business cycle analysis and the construction of cyclical composite indicators.

In this context, the key milestone is the Eurostat and UNSD handbook on cyclical composite indicators (link), which was edited by GOPA Luxembourg staff and to which several of our experts contributed.

On the other hand, the growing attention of statistical authorities to social and socio-economic phenomena such as: sustainability, quality of life, poverty, etc. has progressively encouraged statisticians to accept the involvement in the construction of the composite indicators to measure complex multidimensional phenomena.

GOPA Luxembourg has been very active in both fields for many years and has gained high recognition at an international level for its competences.

In the field of business cycle analysis, we have especially focused our attention on:

  • Developing cyclical composite indicators;
  • Dating and detecting turning points;
  • Studying convergence and synchronisation across sectors and countries, developing and comparing univariate and multivariate trending techniques;
  • Studying and modelling together the business and financial cycle;

In the field of the construction of composite indicators, we are focusing our attention on:

  • Analysing the limits of the traditional techniques for construction of composite indicators when phenomena are not numerically measured;
  • Exploring all alternative methods able to deal with nominal and cardinal variables simultaneously;
  • Concentrating on the use of partially ordered sets (POSET) as the most promising approach to be used in case of non-quantifiable phenomena.

The activities of GOPA Luxembourg in both fields have led to one of its staff being appointed as a member of the Task Force on Leading Composite and Sentiment Indicators launched by UNECE.

Our offer:

  • A large variety of training for different levels of participants in both fields of business cycle analysis and composite indicators;
  • Specific capacity building to help our clients achieve full independence in the production, utilisation and dissemination of cyclical indicators and composite indicators;
  • Carrying out and developing feasibility and pilot studies concerning the development of business cycle analysis and construction of composite indicators;
  • Designing and implementing new customised processes for the regular production of business cycle analysis and construction composite indicators;
  • Developing methodological studies on the construction of business cycle analysis and measurement of complex multidimensional phenomena.
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