LEADING INDICATORS – RIO GRANDE DO SUL

Abstract

This paper propose a composite leading indicators at monthly periodicity to represent the economic activity in the state of Rio Grande do Sul based on OECD methodology. We start with 456 different time series data and selected a set of ten with potential statistical and economic characteristics to anticipate the business cycle. The long-term indicators proved too unstable, but the medium-term one showed satisfactory performance anticipating the majority of turning points. The best results were seen in the composite indicator that combines medium and long term series.