Markov-switching and the Ifo business climate: The Ifo business cycle traffic lights

Arbeitspapier

Business cycle indicators are used to assess the economic situation of countries or regions. They are closely watched by the public, but are not easy to interpret. Does a current movement of the indicator signal a turning point or not? With the help of Markov Switching Models movements of indicators can be transformed in probability statements. In this article, the most important leading indicator of the German business cycle, the Ifo Business Climate, is described by a Markov Switching Model. Real-time probabilities for the current business-cycle regime are derived and presented in an innovative way: as the Ifo traffic lights.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 2936

Classification and Topics

• Classification: Wirtschaft ; Business Fluctuations; Cycles ; Single Equation Models; Single Variables: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
• Subject: Ifo business climate ; growth cycle ; turning points ; Markov-switching ; Geschäftsklima ; Zeitreihenanalyse ; Konjunkturumfrage ; Markovscher Prozess ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Abberger, Klaus ; Nierhaus, Wolfgang
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/30735
• Last update: 10.03.2025, 11:43 AM CET