A leading indicator for the development of the gross domestic product

In 2001 a leading indicator for the trend-adjusted real gross domestic product, consisting solely of qualitative time series, was introduced by the Ifo Institute. The time series were taken from the Ifo Business Survey and the GfK Consumer Climate. Here a new variant is presented in which short-term interest rates are included. This mixed, synthetic indicator has a lead of four months, on average, and a better business-cycle correspondence that the reference series. This will allow for the creation of a even better leading indicator for the annual growth rates of GDP.