Back-splicing of cement production and characterization of its economic cycle: The case of Chile (1991-2015)

Cement is a non-storable input in the medium- and long-term. The evidence in Chile shows that cement supply and demand are in relative equilibrium, so the demand or supply of this input can measure the activity in the structural construction or work. The aim of this paper is to backcast the series of cement production since January 2009, using as an instrument the connection of the series of cement sales, available on a monthly basis from 1991- 2013. To this end, we apply the Johansen cointegration method. Then, a model of state-space is proposed to characterize the cycle of cement production, taking its connection with investment in construction into account. Indeed, cement production, technically, is a leading indicator of sectoral investment.