A Model to Estimate a Composite Indicator of Economic Activity (CIEA) for Uganda
Loading...
Date
2011
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Research Department Bank of Uganda.
Abstract
In this paper a Composite Indicator of Economic Activity (CIEA) for Uganda is developed and its applicability to
explain short run fluctuations of the economy is illustrated. The CIEA is a more flexible and useful tool for shortterm analysis and forecasting of economic activity than econometric models, especially for small, open and rapidly
changing economies. The CIEA methodology is advantageous since composite indexes can reveal common turning point
patterns in a set of economic data in a clearer and more convincing manner than the behavior of any individual
component. The methodology adopted here is the famous Conference Board technique which has features similar to the
Moore- Shiskin methodology. The CIEA is computed for the period January 2005 to April 2011 using monthly
data of eight key variables, exports, imports, credit, VAT, PAYE, excise duty, cement production and sales for
selected products. The results of the analysis reveal a general upward trend in economic activity. With reference to the
recent past between January and April 2011, there was slowdown in economic activity in the months of February and
April. Going forward, economic activity is expected to trend upwards for the reminder of the financial year. A snap
shot comparison of the CIEA and quarterly GDP reveals a close correlation between the two series. The paper
therefore recommends the adoption of the current CIEA in Uganda and proposes continuous improvement with more
data.
Description
Keywords
business cycle composite index, lagging indicators leading indicators
Citation
Anguyo, F. L. (2011). A model to estimate a composite indicator of economic activity (CIEA) for Uganda. Research Department Bank of Uganda.