COMPOSITE LEADING INDICATORS OF ECONOMIC CYCLES IN POLAND AND SLOVAKIA

The main objective of this article is to suggest and create the composite leading indicators for a short term prediction of the business cycles in Poland and Slovakia. In the theoretical part we define the composite leading indicator and its importance for the monitoring of the economic cycles. We describe in detail the methodologies of the OECD and the Eurostat, which deal with the prediction of the business cycles in Poland and Slovakia through selected economic indicators and the reference series, which represent the economic cycle of these countries. Based on the performed analysis we define the groups of leading, coincident and lagging indicators. Subsequently, we choose out of the leading indicators group those that are the most appropriate for the creation of the composite leading indicator (CLI). Then we create the CLIs and we study their prediction abilities through the values of the cross-correlations. Besides the creation of our own CLIs, we also compare these CLIs with the CLIs of the Eurostat and OECD and bring the conclusions on suitability or unacceptability of the individual CLIs for a given V4 country. The paper was elaborated within the project VEGA 1/0973/11.