## The Economic Performance Index (EPI): an Intuitive Indicator for Assessing a Country's Economic Performance Dynamics in an Historical Perspective

_IMF Working Papers, October 23, 2013_

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## Bibliographic details
- Authors: Vadim Khramov, John Ridings Lee
- Published: October 23, 2013
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484381298.001

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### Overview and purpose
- Proposes a simple metric called the Economic Performance Index (EPI) to measure general macro‑economic performance of a nation, state, or region in a methodologically simple and intuitive way.
- Combines data on inflation, unemployment, government deficit, and GDP growth into a single indicator.
- Designed for simplicity (no complicated mathematical procedures) and uses a descriptive grading system to maximize ease of understanding for professionals and laypeople.

### Index construction and variants
- Raw EPI:
  - Gives equal weights to its components (inflation, unemployment, government deficit, GDP growth).
- Weighted EPI:
  - Constructed as an alternative weighting scheme.
  - Empirical finding: both Raw EPI and Weighted EPI perform similarly for U.S. data.

### Validation and empirical evidence
- Historical review conducted for the United States from 1790 to 2012.
- Findings from the U.S. historical review:
  - The EPI reflects major events in U.S. history, including wars, periods of economic prosperity and booms, economic depressions, recessions, and panics.
  - The EPI captures official recessions over the past century.
  - The EPI allows for measuring and comparing the relative severity of recessions.
  - Despite its simple construction, the EPI dynamics are similar to those of the Chicago Fed National Activity Index (CFNAI) and The Conference Board Coincident Economic Index® (CEI).

### Subject areas and keywords (as listed)
- Subject:
  - Budget planning and preparation, Economic growth, Economic recession, Government debt management, Inflation, Labor, Prices, Public financial management (PFM), Unemployment rate
- Keywords:
  - Budget planning and preparation, economic index, Economic Performance, Economic recession, economic system, EPI indicator, EPI score, Europe, Government debt management, Indicator, Inflation, inflation rate, Raw EPI, Unemployment rate, WP

### Notes and disclaimers (as provided)
- This Working Paper should not be reported as representing the views of the IMF.
- The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy.
- Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

*IMF Working Papers — "The Economic Performance Index (EPI): an Intuitive Indicator for Assessing a Country's Economic Performance Dynamics in an Historical Perspective", Vadim Khramov and John Ridings Lee, October 23, 2013.*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/the-economic-performance-index-epi-an-intuitive-indicator-for-assessing-a-country-s-economic-41005_