Coincident Economic Index for the Finnish Economy (CEI-FI)

CEI-FI in brief

CEI-FI is a monthly, real-time estimate of coincident Finnish economic activity. It is designed for measuring (nowcasting) business cycle conditions at present time, summarizing the information contained in a large set of macroeconomic and financial data to a single index.

CEI-FI is based on the following grounds and interpretations:

* It can be interpreted as the underlying monthly real GDP, whereas the real GDP itself is measured in a quarterly basis and released with a considerable lag and only a few times per year.

* It is based on the use of mixed data frequencies (daily, monthly and quarterly data). We believe, in line with a large amount of past academic research, that business cycle measurement should be based on various indicators and sectors of the economy than just the quarterly real GDP.

* The index series is freely available at this web page and it is continuously updated in each Monday using the newest data when new information on the underlying business cycle components are released.

* The coincident economic activity index like this can be used to determine business cycle turning points and subsequent business cycle expansion and recession periods.

* The reported growth rate (obtained from the level of the index) is an estimate of real-time monthly economic activity.

CEI-FI: Underlying components

The underlying components in the CEI-FI index are (seasonally adjusted if not otherwise mentioned)

* Real GDP growth (quarterly data)

* Unemployment rate (monthly percentage share of unemployed workforce)

* Industrial production (monthly growth rates)

* Export (monthly trend growth rates)

* Import (monthly trend growth rates)

* Stock prices (lagged changes of the OMX25 index, not seasonally adjusted)


CEI-FI is based on the use of modern econometric models combining the information of various variables, measured at different frequencies, to one single time series. More specifically, CEI-FI is built upon the mixed frequency dynamic factor models developed, for example, by the following authors (see technical details therein):

* Altissimo, F., Cristadoro, R., Forni, M., Lippi, M. and Veronese, G. (2010). New Eurocoin: Tracking economic growth in real time, Review of Economics and Statistics 92, 1024–1034.

* Aruoba, S.B., Diebold, F.X. and Scotti, C. (2009). Real-time measurement of business conditions, Journal of Business and Economic Statistics 27, 417–427.

* Mariano, R.S. and Murasawa, Y. (2003). A new coincident index of business cycles based on monthly and quarterly series, Journal of Applied Econometrics 18, 427–443.

CEI-Fi is partly based upon the past work made by Professor Markku Lanne and Associate Professor Henri Nyberg. Details on the past index can be found in the following articles published in the Finnish Economic Journal (Kansantaloudellinen aikakauskirja):

* Lanne, M. and Nyberg, H. (2009). Suomen kansantalouden suhdanneindeksi. Finnish Economic Journal (Kansantaloudellinen aikakauskirja) 105, 422–432. (”Finnish Business Cycle Index”)

* Lanne, M. and Nyberg, H. (2015). Suomen kansantalouden suhdanneindeksi 2009 – 2014. Finnish Economic Journal (Kansantaloudellinen aikakauskirja) 111, 6–15. (“Finnish Business Cycle Index 2009–2014”)

The major changes, in addition to important real-time availability and updating, are the use of employment share and stock prices as the underlying components. Overall, the individual components described above are all the most common ones used in various international studies concerning the construction of coincident business cycle indices. A detailed description of the CEI-FI is provided in

* Fredriksson, A., Nyberg, H., and Sainio, J. (2020). Coincident Economic Index for the Finnish Economy. Work in progress.

Some comparison to the past approaches employed for the Finnish economy are discussed in Juvonen et al. (2019) Juvonen, P., Anttonen, J., Fornaro, P., Nissilä, W., Nyberg, H. and Pönkä, H. (2019). Aikasarjamallit apuna Suomen talouden seurannassa (in Finnish). The Finnish Economic Journal (Kansantaloudellinen aikakauskirja) 3: 440-457 (”Time Series Models in Monitoring the Finnish Economy”)

Funding and contact details

This index is constructed in a project funded by the OP Group Research Foundation (2017) and is made in a co-operation between the Turku School of Economics (Department of Accounting and Finance) and the Department of Mathematics and Statistics (University of Turku).