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A diffusion index analysis of the Argentinean business economic cycle based on the “Survey of Business Economic Perspectives”

Author

Listed:
  • Elosegui, Pedro
  • González, Mirta
  • Pérez, María Cecilia
  • Sangiácomo, Máximo

Abstract

The Central Banks use diffusion indexes (DIs) to synthesize information from proprietary surveys that complement official statistics generating real-time proxies of the economically relevant variables. According to the evidence, the DIs closely follow the economic cycle reflected in those official statistics. In this paper, we calculate diffusion indexes to summarize relevant qualitative information on the economic situation of the firms participating in the Survey of Business Economic Perspectives collected by the Argentinean Central Bank [Banco Central de la República Argentina (BCRA)] and we evaluate their ability to track economic activity in real-time. The indexes are analyzed for the 2017–2022 period, a particularly volatile business cycle for Argentina and (given the impact of Covid-19) for the global economy. Using the qualitative data from the firms we calculate (i) the marginal diffusion index (MDI) proposed by the Federal Reserve Bank of Chicago (FRB-Chicago) and based on the balance of answers corrected by the averaged participant response and, (ii) the marginal fixed diffusion index (MFDI), a real-time variation of the latter. To contrast and validate the indexes’ ability to summarize relevant information we introduce an econometric procedure aimed at assessing their relationships with official economic activity indicators. The results indicate that the DIs calculated with the qualitative BCRA’s Survey information closely track and even anticipate the behavior of other official activity indicators both for the entire sample of firms and for the industrial sector.

Suggested Citation

  • Elosegui, Pedro & González, Mirta & Pérez, María Cecilia & Sangiácomo, Máximo, 2024. "A diffusion index analysis of the Argentinean business economic cycle based on the “Survey of Business Economic Perspectives”," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 5(2).
    • Handle: RePEc:eee:lajcba:v:5:y:2024:i:2:s2666143823000297
    DOI: 10.1016/j.latcb.2023.100108
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    References listed on IDEAS

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    1. Santiago Pinto & Pierre-Daniel G. Sarte & Sonya Ravindranath Waddell, 2015. "Monitoring Economic Activity in Real Time Using Diffusion Indices: Evidence from the Fifth District," Economic Quarterly, Federal Reserve Bank of Richmond, issue 4Q, pages 275-301.
    2. Athanasios Orphanides & Simon van Norden, 2002. "The Unreliability of Output-Gap Estimates in Real Time," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 569-583, November.
    3. Santiago Pinto & Pierre-Daniel Sarte & Robert Sharp, 2020. "The Information Content and Statistical Properties of Diffusion Indexes," International Journal of Central Banking, International Journal of Central Banking, vol. 16(4), pages 47-99, September.
    4. Jacob Berman & Scott Brave & Thomas Walstrum, 2015. "The Chicago Fed Survey of Business Conditions: Quantifying the Seventh District’s Beige Book Report," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q III.
    5. Santiago Pinto & Sonya Ravindranath Waddell, 2022. "Why Use a Diffusion Index?," Richmond Fed Economic Brief, Federal Reserve Bank of Richmond, vol. 22(22), June.
    6. Fanelli, José María, 2002. "Growth, instability and the convertibility crisis in Argentina," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Diffusion index; Business cycle; Economic activity;
    All these keywords.

    JEL classification:

    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions

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