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Business cycle clocks: Time to get circular

Author

Listed:
  • António Rua
  • Nuno Lourenço

Abstract

Assessing the momentum of the business cycle is of utmost importance for policymakers and private agents. In this respect, the use of business cycle clocks has gained prominence among national and international institutions to depict the current stage of the business cycle. Drawing on circular statistics, we propose a novel approach to business cycle clocks in a datarich environment. The method is applied to the main euro area countries resorting to a large dataset covering the last three decades. We document the usefulness of the circular business cycle clock to capture the business cycle stage, including peaks and troughs, with the findings being supported by the cross-country evidence.

Suggested Citation

  • António Rua & Nuno Lourenço, 2022. "Business cycle clocks: Time to get circular," Working Papers w202201, Banco de Portugal, Economics and Research Department.
    • Handle: RePEc:ptu:wpaper:w202201
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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