ABSTRACT
This paper aims at defining a leading indicator for the equipment investment demand in Italy based on information mainly drawn from ISCO’s monthly survey on manufacturing firms. Qualitative series will be analysed in order to assess their ability to lead the annual percentage changes of equipment investment (assumed as reference series). The choice of the candidate series to be aggregated into a single synthetic indicator will be carried out through different tools: the traditional NBER methodology devoted to analyse the turning points and the cyclical evolution of each series and of the reference series; the crosscorrelation analysis; some econometric tests. Two slightly different leading indicators will be scrutinized in order to assess their predictive ability and one of them will be, finally, chosen.
Among the various qualitative indicators, the paper will focus its attention on uncertainty which 4seems to play a relevant role in influencing investment decisions; in particular, the analysis will try to develop different uncertainty indicators, drawn from ISCO’s survey on manufacturing firms.
