Modeling the predictive power of freight transportation to the aggregate economy: an asymmetric approach

Abstract

This paper studies the asymmetric predictive power of freight transportation to aggregate fluctuation in the US economy. Cargo traffic has been found to precede recession while being coincident with recovery in economy-wide business cycles. Its role in business cycles is described by a stage-of-fabrication model. Results from the asymmetric model confirm that freight transportation is more predictive of economic downturns than upturns, while inventory cycles are more informative in signalling economic recovery. The forecasting power of freight transportation to aggregate economic fluctuation is valid over a 12-month horizon for downturns and over about a 6-month horizon for upturns. (A)