Business Cycles in BRICS

Foreword......Page 6
Preface......Page 8
Contents......Page 10
 1 What Is a Business Cycle (in the BRICS)?......Page 13
 2 Social and Political Ins and Outs of Economic Cyclicity......Page 15
 4 Structure of the Book......Page 16
 References......Page 17
Part I: The Global Economy and BRICS......Page 19
  1 Who Is BRICS?......Page 20
  2 BRICS in the Global Economy: Macro-indicators......Page 22
  3 The Role of BRICS in Global Goods Production......Page 26
  4 BRICS in Global Commodities and Capital Markets......Page 30
  5 BRICS´ Contribution to Global Growth......Page 37
  References......Page 39
  1 Introduction......Page 40
  2 Literature Review......Page 42
  3 Measuring TFP......Page 45
  4 TFP, Institutions, and Growth......Page 51
  5 Conclusion and Discussion......Page 61
  References......Page 64
  1 Introduction......Page 66
   3.1 Data......Page 67
   3.2 Econometric Model......Page 69
    3.3.1 Static Connectedness......Page 70
    3.3.2 Dynamic Connectedness......Page 71
  4 Conclusions......Page 73
  References......Page 76
Part II: History and Driving Forces of Economic Cycles in BRICS......Page 77
  1 Introduction......Page 78
  2 Stagnant Productivity and Unsustainable Growth......Page 79
  3 Inflation and Failed Stabilization Plans: 1981-1993......Page 81
  4 Economic Stabilization and Adverse Shocks: 1993-2003......Page 83
  5 Growth, Unsustainable Policies, and Recession: 2004-2014......Page 87
  6 Fiscal Abyss and Deep Recession: 2014-2017......Page 91
  7 Conclusion......Page 93
  Secondary Sources......Page 95
  1 Introduction......Page 97
   2.1 Official Data in Natural (Physical) Units for the RF and the RSFSR......Page 99
   2.2 Alternative Index of Industrial Production for the RSFSR and the RF, Post-1960......Page 101
   3.1 Main Annual Indicators Trajectories......Page 102
   3.2 Overall Contractions in the Russian Economy......Page 106
  4 Conclusions......Page 113
  Appendix 1......Page 115
   Index of Industrial Production, Official......Page 120
    Grain Production......Page 121
    Grain Area Planted......Page 122
   New Residential Completions......Page 123
   Railroad Freight Transportation......Page 124
  References......Page 125
  1 Introduction......Page 128
  2 Indian Business Cycles: 1950-1991......Page 129
   3.2 The Balance of Payments Crisis in 1990-1991......Page 134
   3.3 Reforms to Address the Crisis......Page 135
   3.4 Turning Points......Page 138
   3.5 Methodology to Identify Turning Points from 1996 Onwards Using GDP......Page 139
    3.5.1 Quarterly Growth Cycle Turning Points......Page 141
   4.1 The Decade of the 1990s......Page 142
   4.2 The Phases of Acceleration and Deceleration from 1999 Onwards......Page 144
  5 Current Cyclical Conditions: Post-2012-Q4......Page 149
   5.1 Drivers of Deceleration Post-2012......Page 151
  6 Conclusion......Page 152
  Appendix 2: Recent Changes in the Indian GDP Measurement......Page 154
  References......Page 157
  1 Introduction......Page 160
  3 The Korean War and ``Sovietization´´ of the Chinese Economy......Page 161
  4 ``Self-Reliance´´ and the Third Front......Page 165
  5 Turn to the West......Page 166
  6 After Chairman Mao......Page 168
  7 Price Reform and High Inflation......Page 170
  8 Transformation into an Export-Oriented Economy......Page 171
  9 Asian Financial Crisis and Its Aftermath......Page 173
  11 Global Financial Crisis of 2007-2008 and Its Aftershocks......Page 175
  12 Global Financialization and Stock Market Crashes......Page 176
  13 Concluding Remarks......Page 178
  Appendix: Main Macroeconomic Indicators of China, 1950-2017......Page 179
  References......Page 181
  1 Introduction......Page 182
  3 Characteristics of Cycles......Page 183
  4 Determinant Factors of the Cycles......Page 186
  References......Page 191
  1 Introduction......Page 192
   2.1 Methodology Applied......Page 193
   2.2 Major Cyclical Drivers......Page 195
   3.1 Methodology Applied......Page 197
   3.2 Major Cyclical Drivers......Page 198
   3.3 Business Cycle Characteristics......Page 200
   4.1 Methodology Applied......Page 201
   4.2 Three Subperiods: Major Cyclical and Structural Drivers......Page 203
    4.2.1 Post-War to 1970: Rapid Growth and Industrialization......Page 205
    4.2.2 1971 to 1993: Political Instability, High Inflation and Low Growth......Page 208
    4.2.3 1994 to 2016: Democracy and International Reintegration......Page 212
  5 Conclusion......Page 216
  References......Page 217
Part III: Business Tendency Surveys (BTSs) in BRICS......Page 219
 International Tradition of Tendency Surveys......Page 220
  1 Economic Tendency Surveys´ Uses and Characteristics......Page 221
  References......Page 222
  1 A Short History of Economic Tendency Surveys (ETS) in Brazil......Page 224
  2 Brazilian Programme of Tendency Surveys: Methodological Features......Page 225
   2.1 Brazilian Business Tendency Surveys......Page 226
   2.2 Brazilian Consumer Survey......Page 228
  3 Uses of Tendency Surveys in Brazil......Page 229
   3.1 Specific Uses of Survey Data in Brazil......Page 230
   3.3 Conclusion......Page 234
  Appendix......Page 235
  References......Page 236
  1 Introduction......Page 238
  2 Background......Page 239
  4 Sample Design......Page 240
  6 Data Collecting and Treatment......Page 241
  7 Sectoral Surveys......Page 242
   8.1 Confidence Indicators......Page 244
   8.2 Economic Sentiment Indicator......Page 245
   8.3 Economic Sentiment Tracer......Page 246
   8.4 Business Climate Indicator......Page 247
  9 Main BTS Results......Page 248
  10 BTS Results Implementation......Page 250
  11 Future Development of Russian BTS......Page 251
  Appendix......Page 252
  References......Page 255
  1 Introduction......Page 257
  2 Scope......Page 258
  3 Data Collection......Page 262
  5 Reliability of the Survey Results......Page 263
  References......Page 267
  1 Introduction......Page 269
    3.1.1 Sample Size and Sample Structure......Page 270
   3.2 The Questionnaires......Page 271
   3.3 Collection Method, Response Rate, and Timing......Page 273
    4.2.1 Business Climate Index......Page 274
    4.2.2 Business Confidence Index......Page 275
    4.2.3 Other Indices......Page 276
   5.2 Other Survey Data......Page 277
    5.2.3 Assessment of Quantitative Data......Page 278
   6.1 Limitations......Page 279
    6.2.4 International Exchanges and Cooperation......Page 280
  Bibliography......Page 281
  1 Introduction......Page 282
  2 Scope......Page 283
    3.1.1 Population Universe and Survey Frame......Page 284
    3.1.2 Sampling Method and Panel Maintenance......Page 285
   3.2 The Questionnaires......Page 287
   3.3 Collection Method, Response Rate and Timing......Page 289
   4.1 Estimation Procedure: Weighting and Aggregation......Page 291
  5 Reliability of the Survey Results......Page 292
   5.2 Non-sampling Errors......Page 293
   5.3 Sensitivity Analysis and Plans for the Future......Page 294
  6 Publication of the Survey Data......Page 299
  7 Use of the Survey Data......Page 300
  8 Final Remarks......Page 301
  References......Page 302
Part IV: Composite Cyclical Indicators for Real-Time Monitoring and Forecasting the BRICS Economies......Page 304
  1 Introduction......Page 305
   2.1 Cycles, Cyclical Phases, and Dating Turning Points......Page 306
   2.3 Composite vs. Aggregate Indicators......Page 307
  3 Selection of Individual Cyclical Indicators......Page 308
  4 Compilation of Composite Indexes......Page 310
  5 Main Challenges......Page 311
   5.2 Particularities of National Statistical Systems......Page 312
   5.3 Changing Structure of Economies......Page 313
  References......Page 314
  1 Introduction......Page 316
   2.1 The Coincident Series......Page 317
   2.2 The Official Recession Chronology......Page 319
   2.3 The Coincident Economic Index (CEI)......Page 320
   3.1 Selecting Leading Series......Page 321
   3.2 Scoring Leading Indicators Using a Markov-Switching Model......Page 322
  4 Growth Cycles......Page 326
  5 Conclusion......Page 327
  Appendix 1......Page 328
  Appendix 2......Page 329
  References......Page 330
  2 Members......Page 331
  4 Analysis Conditional on Data Availability......Page 332
  7 Conclusions......Page 333
  References......Page 335
  1 Introduction......Page 336
  2 The Leading and Coincident Composite Indicators for the Brazilian Economy......Page 337
   3.1 Maximum Likelihood Estimation......Page 339
   3.2 Bayesian Estimation......Page 340
  References......Page 343
  1 Introduction......Page 345
   2.1 Main Versions of Russian CLIs......Page 346
   2.2 Sets of Components......Page 347
  3 Dating of Cyclical Turning Points for Russia......Page 350
  4 Warning Signals for the Recent Russian Recession......Page 352
  5 Conclusion......Page 355
   Russian Economic Cycle Dating Committee (Russian Dating Committee, RDC) Under the Association of Russian Economic Think Tanks .........Page 356
  Appendix 2: Short glossary for the OECD´s news releases......Page 357
  References......Page 358
  1 Introduction......Page 360
  2 Indices of Regional Economic Activity (REA): Data and Calculation......Page 361
  3 REA Indices and Monitoring the Current Economic Situation......Page 367
  4 Conclusion......Page 371
  References......Page 372
  1 Introduction......Page 373
   2.1 Construction of the Coincident Economic Index (CEI)......Page 374
   2.2 Determining a Reference Chronology of the Business Cycle......Page 375
   2.3 Determining a Reference Chronology of the Growth Cycle......Page 376
   3.1 Construction of the Leading Economic Index (LEI)......Page 377
   3.2 Review of the Selected Leading Indicators......Page 379
  4 Results for CEI and LEI......Page 382
  5 Concluding Remarks......Page 384
  Appendix......Page 385
  References......Page 387
  1 Introduction......Page 389
   2.1 BCIs in China: A Survey......Page 390
    3.1.1 Method for Data Processing, Choosing Indicators, and Constructing the BCI......Page 391
    3.1.4 Benchmark Indicator......Page 392
    3.1.5 Components......Page 393
   3.2 Composite Index......Page 394
   3.3 Diffusion Index......Page 395
   3.4 Application of the BCI Composite and Diffusion Indices to the Analyses of the Current Situation......Page 396
   4.2 Choice of the Benchmark Indicator......Page 397
  References......Page 398
   1.1 Challenges......Page 400
   1.2 The Conference Board´s Response......Page 401
  2 Coincident Indicators for China......Page 402
   2.1 Advantages of Using the Coincident Economic Index for Business Cycle Analysis in China......Page 403
   2.2 Selecting Components of the Composite Index of Coincident Indicators......Page 404
   2.3 2016 Comprehensive Benchmark Revisions to the China CEI......Page 406
   2.4 Dating Business Cycles in China with Composite Coincident Economic Index (CEI)......Page 407
  3 Creating the Composite Index of Leading Indicators......Page 409
  4 Growth Cycles in the Chinese Economy......Page 412
  5 Concluding Remarks......Page 413
  Appendix......Page 415
  References......Page 417
  1 Introduction......Page 419
  2 Van Coller´s Composite Business Cycle Indicators......Page 420
   3.1 Selection Criteria and Aggregation Methodology Used......Page 421
    3.2.1 The Original 1983 Version......Page 423
    3.2.2 The 1994 Revision......Page 429
    3.2.3 The 2004 Revision......Page 430
    3.2.5 The 2015 Revision......Page 433
   3.3 Why the Frequent Revisions?......Page 434
  4 Evaluating the SARB´s Composite Business Cycle Indicators......Page 435
  5 Current Dissemination of the SARB´s Composite Business Cycle Indicators......Page 437
  6 Conclusion......Page 439
  References......Page 440
  1 Introduction......Page 441
  2 Challenges in Relying on the SARB Business Cycle Indicators......Page 442
   4.1 Business Confidence Indices by BER and SACCI......Page 443
    4.2.1 Correlations......Page 444
    4.2.2 Leading Indicator Properties......Page 446
    4.2.3 Predictive Power for GDP Growth......Page 448
  5 An Alternative Algorithm for Dating South Africa Business Cycle Recessions......Page 454
  6 Conclusion......Page 456
  References......Page 457
  1 Introduction......Page 459
  2 Causes and the Propagation of South African Business Cycles......Page 460
   2.1 The Issue of Exogeneity and Endogeneity......Page 461
   2.2 Characteristics of the South African Business Cycle......Page 463
    2.2.1 Global Influences......Page 464
    2.2.2 The South African Economy......Page 467
  3 Forecasting the Business Cycle......Page 472
   3.1 Basic Economic Forecasting Techniques......Page 473
    3.1.1 Indicator Analysis......Page 474
    3.1.2 Extrapolative Techniques/Time Series Models......Page 476
    3.1.3 Econometric Models......Page 477
    3.1.4 State-of-the-Art......Page 478
   3.2 Economic Forecasting at the BER......Page 480
    3.2.1 Historical Overview......Page 481
    3.2.2 The Forecasting Process......Page 483
    3.2.3 Key Economic Forecasting Lessons......Page 485
  4 Concluding Remarks......Page 486
  References......Page 487
Part V: Concluding Remarks......Page 490
  1 Introduction......Page 491
  2 Cyclicality and Other Driving Forces of Economic Activity......Page 492
  3 Business Tendency Surveys and Their Applications......Page 493
   4.1 A Priori Choices......Page 495
   4.2 Composite Cyclical Indices: Step by Step Construction......Page 498
  5 Concluding Remarks......Page 501
  References......Page 504