Publication

This paper proposes a novel sequential approach to timely signaling turning points in business cycles. The problem with these turning points is that US data from the National Bureau of Economic Research are reported with a considerable delay. According to the authors, the procedure they introduce shows a sound detection ability for business cycle peaks and troughs compared to the established dynamic factor Markov switching methodology. They argue that the new approach exhibits a range of theoretical optimality properties for early signaling and is transparent and easy to implement.