The Ifo Business Climate: A reliable leading indicator

The Ifo Business Climate for German Industry and Trade is a widely observed indicator for economic activity in Germany. In ifo Schneldienst 3/2007 the special lead properties of this indicator at cyclical turning points was discussed. The reference series was the cyclical component of real GDP. In this article further important qualities of the Ifo Business Climate indicator are shown with respect to macroeconomic output. Along with a study in the time range, an in-depth analysis in the frequency range is also made.