Can we accurately track the global economy's health in real time? This research proposes a novel empirical framework for measuring the real-time weakness of the global economy, offering a tool for high-frequency insights into economic strength, regional support, risk assessment, and the intensity of economic episodes. The framework uses nonlinear factor models to identify recessionary and expansionary periods for major advanced and emerging economies, utilizing several macroeconomic variables. This country-specific data is then combined to construct a Global Weakness Index and a Global Intensity Index. The framework is continually updated with new economic data, providing a dynamic assessment of global economic conditions. This approach offers valuable insights for policymakers, investors, and researchers. By providing real-time assessments of global economic weakness, the framework enables more timely and informed decision-making, ultimately contributing to better economic management and stability. It provides a means to analyze global economic trends and potential risks, while identifying the regions contributing to or hindering overall economic strength.
Published in the Journal of Applied Econometrics, this research aligns with the journal's focus on econometric methods and their application to economic analysis. The development of a real-time index for measuring global economic weakness is a valuable contribution to the field, providing a tool for monitoring and understanding complex economic dynamics. This research is significant for economists and policymakers interested in assessing global economic conditions and making informed decisions.