The Ifo Business Cycle Clock: circular correlation with GDP

In 1993 the cyclical relationship between the two components of the Ifo Business Climate - business situation and expectations - was presented for the first time in the form of a four quadrant business-cycle scheme: the Ifo Business Cycle Clock. In the meantime there are additional monitoring systems that present cyclical developments in a four quadrant scheme. With these systems, the relationship between the cyclical components and their change over time is shown for selected indicators. This article discusses the relationship between the Ifo Business Cycle Clock and an economic activity monitor constructed to display real GDP in Germany.