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The IFO Business Cycle Clock: Circular Correlation with the Real GDP

31 Pages Posted: 24 Sep 2010  

Klaus Abberger

KOF Swiss Economic Institute

Wolfgang Nierhaus

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Date Written: September 23, 2010

Abstract

The IFO Business Climate is the most important indicator for the business cycle in Germany. In 1993 the connection between the two components of the business climate – business situation and business expectations – was graphically portrayed by Ifo in a 4-quadrant scheme: the IFO Business Cycle Clock. Today similar monitoring systems are firmly established and are presented by Eurostat, the OECD and others. The German Federal Statistical Office presents the real GDP in a 4-quadrant scheme. In the following, important qualities of the Ifo Business Cycle Clock are shown. The importance of orthogonal functions for the circular correlation is examined.

Keywords: Ifo business climate, growth cycle, circular correlation, linear-circular correlation, temporal disaggregation

JEL Classification: E32, C32, C39, C22

Suggested Citation

Abberger, Klaus and Nierhaus, Wolfgang, The IFO Business Cycle Clock: Circular Correlation with the Real GDP (September 23, 2010). CESifo Working Paper Series No. 3179. Available at SSRN: https://ssrn.com/abstract=1681322

Klaus Abberger (Contact Author)

KOF Swiss Economic Institute ( email )

Zurich
Switzerland

Wolfgang Nierhaus

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

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