Comparison of Business Cycles in Japanese Prefectures:Estimation using a Composite Index

Abstract

　　In order to develop comprehensive regional revitalization measures, it is essential to accurately grasp regional economic trends early.　In addition, economic measures can be implemented in line with the actual situation of the regional economy by accurately grasping economic conditions that differ by region, and strength of an economic wave.

　　Presently, Indexes of Business Conditions （Composite Index:CI） are used as a method for grasping regional economic trends, and making economic judgments based on the regional block and prefectural unit indices.

　　On the other hand, 33 prefectures of Japan do not have CI.　A CI is created by combining a plurality of economic indicators, so indicator levels and change rates among prefectures cannot be compared because the CI of each prefecture may be composed of different economic indicators.

　　Therefore, we tried to create a CI that can be used to compare economic trends among prefectures.　By introducing a method to reflect differences in the industrial structure of prefectures based on indicators common to all prefectures, we aimed to determine the regional economic trends more accurately.

　　CI can measure the turning point of a business cycle, and has a high correlation with Short-term Economic Surveys of Principal Enterprises in Japan and are suitable for obtaining the confidence of prefectures.

　　Furthermore, factors related to the economic expansion and recession, and their transmission route can be inferred from the prefectural CI and degree of contribution of each series.

JEL Classifications:E32, P25, P48