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How is the reference date of business cycle determined?

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The so-called reference date of business cycle refers to the time points of the peak and trough of overall economic fluctuations. As for reference dates recognized by nations around the world, take the US National Bureau of Economic Research, NBER for instance, the concept of classic cycle is adopted using in representative indicators four sectors namely, employment, production, income, and sales. Analysis is conducted targeting the representative indicators, supplemented by GDP data, to make composite determination and for the Business Cycle Dating Committee to make the final confirmation. In Japan, the historical Diffusion Index calculated by coincident indicator components are used to determine the preliminary reference date. Finally, the Committee for Business Cycle Indicators completes the identification. The OECD adopts the concept of growth cycles using GDP as the reference series for identifying turning points.

Taiwan’s identification of the reference date of economic cycle is based on the concept of growth cycles. In addition to selecting a set of representative economic indicators composed into one reference series, the performance of individual representative indicators services as a reference for determining the reference date. The economic peak and trough identifying work concerned is determined by representative series such as production, consumption, employment, trade, and transaction compiled into a Diffusion Index that aids in the determination of the reference date of economic cycle. Finally, experts and scholars from all sides are invited for joint discussions to complete the identification of the peak and trough date.

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