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Construction of an economic sentiment indicator for the Korean economy

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  • Construction of an economic sentiment indicator for the Korean economy
  • Moon, Hyejung
  • The Korean Statistical Society


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Title Construction of an economic sentiment indicator for the Korean economy
Similar Titles
Material Type Articles
Author(English)

Moon, Hyejung

Publisher

[Seoul]:The Korean Statistical Society

Date 2011
Journal Title; Vol./Issue The Korean Journal of Applied Statistics:Vol. 24(No. 5)
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic Conditions
Economy < Economic Administration
Holding The Korean Statistical Society

Abstract

An Economic Sentiment Indicator(ESI) is a composite indicator of business survey indices(BSI) and consumer survey indices(CSI). The ESI designed to reflect economic agents’ (this includes producers and consumers) overall perceptions of economic activity in a one-dimensional index. The European Commission has published an ESI since 1985. This paper demonstrates the construction of an ESI for the Korean economy. The BSI and CSI components (having a high correlation and a leading feature with respect to GDP) are selected to construct the ESI and they are aggregated using a weighted average and then scaled to have a long-term average of 100 and a standard deviation of 10. Thus values greater than 100 indicate an above-average economic sentiment and vice versa. The newly constructed Korean ESI that extends to January 2003 shows a good tracking performance of GDP and adequately reflects the overall perception of economic activity