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Introduction

Introduction. A Process of Developing BCC. The composition of BCC. Examples of BCC utilization. Unique features of BCC. Ⅰ. . Introduction. Need of users.

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Introduction

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  1. Introduction A Process of Developing BCC The composition of BCC Examples of BCC utilization Unique features of BCC

  2. Ⅰ . Introduction Need of users People, not only economists but also ordinary people, want to know Business Cycle more easily, even though R.O.K provides Composite Economic Index. Statistics Korea Needs a device to induce people’s interest in statistics and to support user’s economic analysis. Statistics Korea developed BCC which showed a visualized business trend and could be more easily understood than Composite Economic Index (CEI). 3

  3. Ⅱ . A Process of Developing BCC 1 Making T/F Team BCC development was performed by collaboration Economic Statistics Bureau • Planning and studying Calculation method Statistics Information Bureau • DB construction and management 4

  4. Overseas Cases 2 5

  5. The criteria for indicators determined 3 1 The criteria for individual indicators Strong theoretical grounds for inclusion A sufficiently strong and timely relation with the business cycle Timely detection of major turning points in the business cycle If possible, related to the general business cycle A sufficiently long time series available 6

  6. 2 The criteria for the indicator set as a whole All major aspects of the economy should be represented The set should be balanced. One aspect of the economy or one type of indicator should not dominate the Business Cycle Clock The whole system should be roughly coincident with the business cycle Major turning points in the cycle should be timely and reliably detected 7

  7. 3 Ten key economic indicators selected 8

  8. 4 A method of cycle extraction • Considering some points for cycle extracting method • small revision as monthly data added • identifying turning point early • stability of identified turning point • Reviewing filtering methods • PAT, single HP, double HP, CF • Adopting ‘Double HP’ for our BCC. 9

  9. < Reference 1 : Schedule of Developing BCC > ’08. 12 • Development examination of BCC ’09. 2 ~ 3 • Bidding and ordering • Investigate BCC development ·operating status of 4 euro institute • Design main screen • Indicator selection and compute cycle ’09. 4 ~ 6 • Implementation of BCC • Hearing opinion of internal and external expert ’09. 7 ~ 9 ’09. 10 • Pilot operation ’09. 12 • Public service 10

  10. 11 1 2 3 4 5 6 7 8 9 10 Ⅲ . The composition of Business Cycle Clock To the beginning of timeline Previous month  Next month  To the end of timeline Play animation (backward) Play animation (forward) Stop Repeat Increase/decrease animation speed Show grid Trace length 1 2 3 4 5 6 7 8 9 10 11 11

  11. Ⅳ . Example of BCC utilization 1 A case of 2008 – 2009 Financial Crisis • During the global financial crisis in the second half of 2008, we can see how BCC represents the economic situation. • The movement of BCC showed that key indicators headed for the trough. 12

  12. July 2008 July 2008 August 2008 August 2008 September 2008 September 2008 October 2008 October 2008 09 / 2008 08 / 2008 10 / 2008 07 / 2008 4 3 2 1 -1 -2 -3 -4 above trend above trend expansion downturn -1 - 0.8 - 0.6 - 0.4 - 0.2 0 0.2 0.4 0.6 0.8 1 recovery slowdown below trend below trend 13

  13. After global financial crisis in the first half of 2009, the movement of BCC was passing the trough toward recovery, and Composite Economic Index also showed the recovery. 14

  14. March 2009 April 2009 May 2009 June 2009 April 2009 May 2009 June 2009 March 2009 05 / 2009 04 / 2009 06 / 2009 03 / 2009 4 3 2 1 -1 -2 -3 -4 above trend above trend expansion downturn -1 - 0.8 - 0.6 - 0.4 - 0.2 0 0.2 0.4 0.6 0.8 1 recovery slowdown below trend below trend 15

  15. The current economic situation 2 Most indicators in Korea are located in the green and orange quadrant at Dec. 2010 16

  16. The track function 3 A better view on how the cycle has been moving and how long cycles last Service Industry Production Index Retail Sales Index Industrial Production Index 17

  17. Ⅴ . Unique features of BCC 1 Previous reference date available The picture of the previous reference date of an economy is available on the Business Cycle Clock 18

  18. < Reference 2 : What is Reference Dates of Business Cycle > Represent important turning points on expansion and contraction in the aggregate economic activity of a nation. Useful for historical analysis of business cycle Used to assess the economic policies and co-movement of economic indicators Used to test the business cycle behavior and to study the characteristics of economic movements 19

  19. < Reference 3 : The Reference Dates of Business Cycle of Korea > 20

  20. Relationship between CEI and BCC 2 Statistics Korea provides the Composite Economic Index (CEI) as well as Business Cycle Clock The Composite Leading Index, Coincident Index, and Lagging Index which are announced monthly The cyclical component of the Composite Coincident Index and the 12 month smoothed change in the Composite Leading Index are released The Leading and Coincident diffusion indexes are compiled internally and they are used to check economic conditions and identify turning points complementarily. 21

  21. 4 3 2 1 0 -1 -2 -3 -4 4 3 2 1 0 -1 -2 -3 -4 4 3 2 1 0 -1 -2 -3 -4 둔화 상승 둔화 상승 둔화 상승 -1 -0.8 -0.6 -0.4 - 0.2 0 0.2 0.4 0.6 0.8 1 -1 -0.8 -0.6 -0.4 - 0.2 0 0.2 0.4 0.6 0.8 1 -1 -0.8 -0.6 -0.4 - 0.2 0 0.2 0.4 0.6 0.8 1 하강 회복 하강 회복 하강 회복 4 3 2 1 0 -1 -2 -3 -4 둔화 상승 4 3 2 1 0 -1 -2 -3 -4 둔화 상승 -1 -0.8 -0.6 -0.4 - 0.2 0 0.2 0.4 0.6 0.8 1 하강 회복 -1 -0.8 -0.6 -0.4 - 0.2 0 0.2 0.4 0.6 0.8 1 하강 회복 The composite Economic Index showed almost the same trend as that of BCC. C D B E A 98 99 00 01 02 03 04 05 06 07 08 09 10 22

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