1. 1 Early Warning and Business Cycle Indicators in Analytical Frameworks International Seminar on Early Warning and Business Cycle Indicators 14 – 16 December 2009 Scheveningen, The Netherlands

2. Outline  Purpose  General Observations  Composite Indicators  Grouping of analytical indicators

3. Purpose  The proposed and discussed data template for high- frequency indicators establishes a set of statistical indicators that countries are expected to produce  Economists already use sets of indicators for analytical purposes  Questions: ◦ Do these two sets match or overlap? ◦ Why do differences exist? ◦ Where and how should we harmonize these sets?

4. Purpose  A review of major publications analyzing economic and financial development and trends has been undertaken to establish a list of commonly used analytical indicators ◦ Review included international and selected national publications ◦ Indicators and available breakdown and measurement options have been reviewed  The analytical indicators have been compared to the statistical high-frequency indicators in the data template to assess commonalities and differences between the two sets

5. Purpose  Analysis of the results will be used to propose a commonly accepted set of analytical indicators that allow for a consistent and comparable approach to economic analysis  The availability of this comparable set at country level at agreed periodicity would significantly enrich the analysis of the regional and global aggregates, because of its supplementary and more detailed information content

6. General observations  Indicators tend to be more detailed, i.e. showing more of the breakdowns mentioned above, for publications with a narrower geographic focus ◦ The reviewed international publications may use and publish real GDP growth at world and regional aggregates, while national publications show in addition Real GDP by industry and Real GDP by income and expenditure ◦ Many indicators in OECD publications are compared for the US, Japan and the Euro area, a distinction that is not made in the international publications of the IMF, UN and World Bank at that detail.

7. General observations  Tables and graphs produced for individual countries (whether produced by the countries themselves or others that analyze them) tend to show a larger number of indicators, while many of these indicators are not being compiled for international or multinational aggregates  Overall there are two sets of relevant indicators: ◦ a comprehensive set that is produced for each country ◦ a smaller set that is produced for regional or world aggregations

9. General observations  More detailed indicators that are being used at national or multinational level could also be used for comparison at the international level ◦ There is no compelling reason for them not to be applicable  The major obstacle seems to be the lack of available data from a sufficient number of countries

10. Composite indicators  Most analytical indicators are identical to indicators collected in the data template  In some cases additional indicators are derived ◦ Often as ratios of existing indicators ◦ Others as more complex functions, such as indices  The derived indicators are often closer linked to specific types of analysis and carry more descriptive power

11. Composite indicators  Examples: ◦ Inventory over sales ratio ◦ Ratio of the value of housing to household disposable income ◦ Household leverage, i.e. ratio of household net worth to disposable income ◦ Growth in equity prices relative to GDP ◦ Financial Conditions Index

12. Grouping of analytical indicators  The data template groups indicators according to their origin  Analytical indicators could be grouped thematically by their application in analyses ◦ This could lead to a more consistent way of applying the indicators in analytical contexts ◦ Individual indicators can appear in multiple thematic groupings  The groupings provided are just a starting point and should be further discussed

13. Conclusions  Standardization of analytical indicators would improve comparability of analyses across countries  The acceptance of the data template combined with a an agreed list of analytical indicators should set the foundation for increased data availability by setting priorities ◦ Analytical indicators may be collected in the template or derived from those collected indicators  Further alignment of analytical indicators with the tiers in the data template should be the next step

14. Thank you