Economists Do It With Models

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New Leading Indicator: Cat Aspect Ratio…

December 23rd, 2013 · 4 Comments
Fun With Data · Macroeconomics

I’ve written about weird economic indicators before, and there are even pretty comprehensive lists of such things available on the interwebs. What is less available is clarification regarding the different types of economic indicators.

Luckily, the taxonomy of indicators uses fairly intuitive names- “leading” indicators are quantities that tend to track future economic movements, “coincident” or “concurrent” indicators are quantities that tend to track current economic movements, and “lagging” indicators are quantities that tend to track past economic movements. (Technically, indicators can be related to things other than economic movements, but we’re talking about economics here, so none of that funny business.)

I can easily see how leading indicators are useful, since they essentially predict future recessions, expansions, etc. If I think about it for a second, I can also see how coincident indicators are useful, especially in cases where they are available sooner than official economic statistics. (In other words, even though coincident indicators basically say things like “hey, we’re in a recession right now,” which seems sort of silly, it may be the case that we can see the indicator data before we can see the GDP data, in which case the indicator could help us learn sooner that we are actually in a recession.) In contrast, lagging indicators basically tell us “hey, did you know that we’ve been in a recession for 4 months now?” so it’s significantly more difficult for me to see how they could be leveraged effectively…but hey, let me know if you have suggestions or inside information. (Investopedia, for example, cites confirming trends as a use of lagging indicators, but even they don’t seem particularly, well, bullish on the concept.)

Luckily, I have a leading rather than lagging indicator for you- cat aspect ratio as a leading indicator of economic performance. Yes, this indicator probably doesn’t stand up to empirical scrutiny, but what it lacks in accuracy it more than makes up for in cuteness. Oh, and something about engineers describing cat features.

Tags: Fun With Data · Macroeconomics

4 responses so far ↓

  • 1 Mike // Dec 24, 2013 at 12:59 am

    Cat aspect ratio is for when you want your data meow.

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  • 4 Arjun // Apr 18, 2015 at 6:39 pm

    I believe indicators are good only if we have got knowledge and experience, but if we don’t have that then we will never be able to get any benefits no matter how great the indicator is. I am doing trading without indicators, but in a long like cTrader, it’s provided by OctaFX broker and has really upgraded system with many amazing features which includes advance charts and also option to show us which trading session we are trading on, it’s written below the terminal.

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