Euro Area Business Cycle Dating Committee

These differences explain why some of the CEPR criteria for dating business cycles differ from those used by the NBER:

• Unlike the NBER for the US, the CEPR committee dates in terms of quarters rather than months. Currently, the most reliable European data for our purposes, and those around which a reasonable consensus can be achieved, are the quarterly series.
• The Committee analyses euro area aggregate statistics, but it also monitors country statistics to make sure that expansions or recessions are widespread over the countries of the area. There is no fixed rule by which country information is weighted.
• The Committee views real GDP (euro area aggregate, as well as national) as the main measure of macroeconomic activity, but it also looks at additional macroeconomic variables, for several reasons. First, euro area GDP series constructed for the pre-EMU era reflect not only movements in economic activity but also changes in exchange rates, which are problematic. Second, GDP statistics are sometimes subject to large subsequent revisions, and this makes them an imperfect indicator of current business cycle conditions. Third, measured GDP does not always move in parallel with its individual major components (which may indeed be moving in different directions) or other macroeconomic aggregates such as employment. Fourth, these variables are known to display more cyclicality than GDP and are useful in strengthening opinions when the GDP data do not seem very decisive. They are also available (with the exception of investment) earlier and at a higher frequency than GDP.
• For recent euro area data (since the end of the 1990s) we use, where possible, official Eurostat statistics and focus primarily but not exclusively on (1) quarterly GDP (Eurostat source); (2) quarterly employment (OECD); (3) monthly industrial production (Eurostat); (4) quarterly business investment (Eurostat); (5) consumption and its main components (Eurostat and ECB). For country data, we use Eurostat and OECD sources and monitor Germany, France and Italy systematically.
• Historical euro area data since the 1970s are provided by the OECD and the ECB. We mainly use the ECB source. For national data, we have used the OECD and the IMF.
• We do not use a fixed rule to weight different data series, although we give primary emphasis to GDP.
• The committee informally assesses the depth, duration and severity of a recession. Hence although recessions are usually characterized by at least two consecutive quarters of declining GDP, this is not a fixed rule. more...