Leading Indicators in the OECD Countries

There are two main approaches to business cycle forecasting: (a) sctructural approach (econometric models) and (b) the indicator approach (analytical method). Despite the wide use of econometric models, a more efficient way for monitoring current business activity and short-term forecasting seems to be the indicator or barometer approach. This employs a set of sensitive economic indicators, selected according to specific criteria and reflecting different aspects of business activity. The set may include both quantitative and qualitative indicators, the latter taken from business and consumer surveys. A sub-set called leading indicators is directly applicable in forecasting. This comproses the indicators which, as a rule, turn up and down earlier than the respective peaks and troughs f the reference cycle. Composite indicators may be developed to reflect the general tendency seen in a group of individual indicators. The paper presents cyclical indicator approach as applied in USA and shows the full list of leading indicators used for he OECD member countries