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Construction of an Economic Sentiment Indicator for the Korean Economy
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 Title & Authors
Construction of an Economic Sentiment Indicator for the Korean Economy
Moon, Hye-Jung;
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 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.
 Keywords
Economic Sentiment Indicator(ESI);business survey index(BSI);onsumer survey index(CSI);gross domestic product(GDP);
 Language
English
 Cited by
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