Business cycle arithmetic: time variation measures and their relations

Abstract

This paper tries to establish mathematical relationships between some of the most used concepts in the analysis of cyclical developments, such as the month-on-month and year-on-year percentage variations, or the annual rate of growth. Some of these relationships are already used in practice, but up to now never demonstrated in a formal way. The ultimate aim is to develop a set of precise analytical tools for the short term analysis of high frequency variables. Analytical derivations are followed by various empirical examples based on data on main Italian economic variables, both monthly (such as the consumer price index) and quarterly variables (like gross domestic product) for the most recent years, in order to illustrate the theoretical relationships and clarify their practical uselfuness.Strumenti matematici : ciclo economico