Entropy-based benchmarking methods

We argue that benchmarking sign-volatile series should be based on the principle of movement and sign preservation, which states that a bench-marked series should reproduce the movement and signs in the original series. We show that the widely used variants of Denton (1971) method and the growth preservation method of Causey and Trager (1981) may violate this principle, while its requirements are explicitly taken into account in the pro-posed entropy-based benchmarking methods. Our illustrative examples show that the entropy-based methods can be regarded as plausible competitors for current benchmarking methods, and maybe preferred in certain cases.