Introduction

StatisticsKOREA

Introduction

A Process of Developing BCC

The composition of BCC

Examples of BCC utilization

Unique features of BCC

Statistics Korea Statistics Korea

Need of users Need of users

. IntroductionⅠ

People, not only economists but also ordinary people, want to know Business Cycle more easily, even though R.O.K provides Composite Economic Index.

Needs a device to induce people’s interest in statistics and to support user’s economic analysis.

Statistics Korea developed BCC which showed a visualized business trend and could be more easily understood than Composite Economic Index (CEI).

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. A Process of Developing BCCⅡ

Making T/F TeamMaking T/F Team

BCC development was performed by collaboration

Planning and studying Calculation method

EconomicStatistics Bureau

Statistics Information

Bureau DB construction and management

1

4

Overseas CasesOverseas Cases

Statistics Netherlands

Statistisches Bundesamt

Deutschland EUROSTAT  OECD

NameBusiness Cycle

TracerBusiness Cycle

MonitorBusiness Cycle Clock Business Cycle Clock

Reference nation Home country Home country34 countries and EU15,

EU25, etc.

34 countries including OECD member and Euro Area, OECD-Total, etc.

Number of indicator

15 12 15 4

Main screen dot dot dot trace

Additional functi

on

Table X

- Link to DB  ․Original series  ․TC  ․Trend  ․Cycle

 ․SA ․MoM of SA ․YoY of original series

Link to OECD Stats

Chart Cycle  Cycle ․SA ․MoM of SA ․YoY of original series

X

Narration O X X X

Filtering HP filter HP filter CF filter HP filter

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The criteria for indicators determinedThe criteria for indicators determined

Strong theoretical grounds for inclusion

A sufficiently strong and timely relation with the business cycle

Timely detection of major turning points in thebusiness cycle

If possible, related to the general business cycle

A sufficiently long time series available

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1 The criteria for individual indicators

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All major aspects of the economy should be represented

The set should be balanced. One aspect of the economy or one type of indicator should not dominate the Business Cycle Clock

The whole system should be roughly coincidentwith the business cycle

Major turning points in the cycle should be timely and reliably detected

2 The criteria for the indicator set as a whole

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Economic Sector Indicator Frequency

Production Industrial Production Index Monthly

Service Industry Activity Index Monthly

Consumption Consumer Goods Sales Index Monthly

Investment

Index of Equipment Investment Monthly

Value of Construction Completed (Real) Monthly

Trade Exports (Real) Monthly

Imports (Real) Monthly

Labor market Number of Employed Persons Monthly

Sentiment Business survey Index (manufacturing) Monthly

Consumer Expectation Index Monthly

3 Ten key economic indicators selected

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Adopting ‘Double HP’ for our BCC.

Reviewing filtering methods

small revision as monthly data added

identifying turning point early

stability of identified turning point

Considering some points for cycle extracting method

PAT, single HP, double HP, CF

4 A method of cycle extraction

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Development examination of BCC

Bidding and ordering

Investigate BCC development ·operating status of 4 euro institute

Design main screen Indicator selection and compute cycle

Implementation of BCC Hearing opinion of internal and external expert

Public service

Pilot operation

’08. 12

’09. 2 ~ 3

’09. 4 ~ 6

’09. 7 ~ 9

’09. 10

’09. 12

< Reference 1 : Schedule of Developing BCC > < Reference 1 : Schedule of Developing BCC >

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. The composition of Business Cycle ClockⅢ

To the beginning of timeline

Previous month 

Next month 

To the end of timeline

Play animation (backward)

Play animation (forward)

Stop

Repeat

Increase/decreaseanimation speed

Show grid

Trace length

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1 2 3 4 5 6 7 8 9 10 11

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. Example of BCC utilizationⅣ

A case of 2008 – 2009 Financial CrisisA case of 2008 – 2009 Financial Crisis1

During the global financial crisis in the

second half of 2008, we can see how BCC

represents the economic situation.

The movement of BCC showed that

key indicators headed for the trough.

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-1 - 0.8 - 0.6 - 0.4 - 0.2 0 0.2 0.4 0.6 0.8 1

4

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2

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-1

-2

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downturn expansion

slowdown recovery

above trend above trend

below trend below trend

07 / 200808 / 200809 / 200810 / 2008

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After global financial crisis in the first half of 2009,

the movement of BCC was passing the trough toward

recovery, and Composite Economic Index also showed

the recovery.

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-1 - 0.8 - 0.6 - 0.4 - 0.2 0 0.2 0.4 0.6 0.8 1

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2

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downturn expansion

slowdown recovery

above trend above trend

below trend below trend

03 / 200904 / 200905 / 200906 / 2009

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The current economic situationThe current economic situation

Most indicators in Korea are located in the green and orangequadrant at Dec. 2010

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The track functionThe track function3

A better view on how the cycle has been moving and how longcycles last

Industrial Production Index Service IndustryProduction Index

Retail Sales Index

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. Unique features of BCCⅤ

The picture of the previous reference date of an economyis available on the Business Cycle Clock

Previous reference date availablePrevious reference date available1

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Represent important turning points onexpansion and contraction in the aggregateeconomic activity of a nation.

Useful for historical analysis of business cycle Used to assess the economic policies andco-movement of economic indicators

Used to test the business cyclebehavior and to study the characteristicsof economic movements

< Reference 2 : What is Reference Dates of Business Cycle > < Reference 2 : What is Reference Dates of Business Cycle >

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CycleReference Date Duration (Month)

Trough Peak Trough Expansion Contraction Total

1st 1972. 3 1974. 2 1975. 6 23 16 39

2nd 1975. 6 1979. 2 1980. 9 44 19 63

3rd 1980. 9 1984. 2 1985. 9 41 19 60

4th 1985. 9 1988. 1 1989. 7 28 18 46

5th 1989. 7 1992. 1 1993. 1 30 12 42

6th 1993. 1 1996. 3 1998. 8 38 29 67

7th 1998. 8 2000. 8 2001. 7 24 11 35

8th 2001. 7 2002.12 2005. 4 17 28 45

9th 2005. 4 2008. 1 2009. 2 33 13 46

10th 2009. 2 　 　 　 　 　

Average - - - 31 18 49

< Reference 3 : The Reference Dates of Business Cycle of Korea > < Reference 3 : The Reference Dates of Business Cycle of Korea >

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Relationship between CEI and BCCRelationship between CEI and BCC2

Statistics Korea provides the Composite Economic Index (CEI) as well as Business Cycle Clock

The Composite Leading Index, Coincident Index, and Lagging Index which are announced monthly

The cyclical component of the Composite CoincidentIndex and the 12 month smoothed change in theComposite Leading Index are released

The Leading and Coincident diffusion indexes are compiled internally and they are used to check economic conditions and identify turning points complementarily.

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The composite Economic Index showed almost the sametrend as that of BCC.

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98 99 00 01 02 03 04 05 06 07 08 09 10

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