Coherence of Trend and Business Cycle in the Development of Main Macroeconomic Indicators

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F26482789%3A_____%2F15%3AN0000004" target="_blank" >RIV/26482789:_____/15:N0000004 - isvavai.cz</a>

Result on the web

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DOI - Digital Object Identifier

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Result language

angličtina

Original language name

Coherence of Trend and Business Cycle in the Development of Main Macroeconomic Indicators

Original language description

The objective of the paper is to show the limits of the application of statistical extrapolation methods used in forecasting the economic growth of a country. These limits arise from the choice of forecasting model as well as from the choice of time period length. The beginning and the end of the selected time period is strongly influenced by the phase of the business cycle. The extrapolation method used in this paper is applied to particular examples of GDP development in the Czech Republic in different time periods. The analysis in this paper has two parts. 1.The effect of different business cycle amplitudes of fluctuations, together with different trends, on the economic growth measurement is shown graphically in model situations. The development of economic indicators is composed by the cycle and the trend (in case of a short time-series after seasonal adjustment). In the economy of two countries with the same amplitude of cyclical fluctuation the fast growing trend means only a slowing of growth in the recession phase, but a low rate of growth may show an absolute decline in production. The second option is the analysis of two countries with different amplitudes of cyclical fluctuation by the same trend of economic development. Deeper recessions mean an absolute decrease in the volume of production in comparison with slowing down economic growth in the case of mild recessions. 2.Examples show that time period choice influences the method of extrapolation as well as the resulting trend. The choice of forecasting model depends not only on the trend development of the analyzed macroeconomic indicator but also on the length of period chosen to build the model on. This is especially the case when, due to the cycle,high fluctuation due to the cycle appears, bringing with it the shortening orextension of the analyzed time period (by only one or two years even). This can crucially influence the results of the analysis.

Czech name

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Czech description

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Type

D - Article in proceedings

CEP classification

AH - Economics

OECD FORD branch

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Project

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Continuities

N - Vyzkumna aktivita podporovana z neverejnych zdroju

Publication year

2015

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Article name in the collection

Sborník - 18th Applications of Mathematics and Statistics in Economics

ISBN

9788024520995

ISSN

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e-ISSN

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Number of pages

9

Pages from-to

1-9

Publisher name

VŠE

Place of publication

Praha

Event location

Praha

Event date

Aug 2, 2015

Type of event by nationality

EUR - Evropská akce

UT code for WoS article

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