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Facts and Challenges from the Great Recession for Forecasting and Macroeconomic Modeling

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  • Serena Ng
  • Jonathan H. Wright

Abstract

This paper provides a survey of business cycle facts, updated to take account of recent data. Emphasis is given to the Great Recession, which was unlike most other postwar recessions in the United States in being driven by deleveraging and financial market factors. We document how recessions with financial market origins are different from those driven by supply or monetary policy shocks. This helps explain why economic models and predictors that work well at some times do poorly at other times. We discuss challenges for forecasters and empirical researchers in light of the updated business cycle facts.

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Article provided by American Economic Association in its journal Journal of Economic Literature.

Volume (Year): 51 (2013)
Issue (Month): 4 (December)
Pages: 1120-54

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Handle: RePEc:aea:jeclit:v:51:y:2013:i:4:p:1120-54

Note: DOI: 10.1257/jel.51.4.1120
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  1. Ng and Wright: Facts and Challenges from the Great Recession for Forecasting and Macroeconomic Modeling
    by Gray in Pseudo-true News on 2013-10-01 04:34:06
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Cited by:
  1. Croushore, Dean & Marsten, Katherine, 2014. "The continuing power of the yield spread in forecasting recessions," Working Papers 14-5, Federal Reserve Bank of Philadelphia.
  2. Giovanni Dosi & Giorgio Fagiolo & Mauro Napoletano & Andrea Roventini & Tania Treibich, 2014. "Fiscal and Monetary Policies in Complex Evolving Economies," GREDEG Working Papers 2014-07, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
  3. Rachidi Kotchoni & Dalibor Stevanovic, 2013. "Probability and Severity of Recessions," CIRANO Working Papers 2013s-43, CIRANO.
  4. repec:spo:wpecon:info:hdl:2441/f6h8764enu2lskk9p6go0e900 is not listed on IDEAS
  5. Piergiorgio Alessandri & Haroon Mumtaz, 2014. "Financial Conditions and Density Forecasts for US Output and Inflation," Working Papers 715, Queen Mary, University of London, School of Economics and Finance.
  6. Belanger, Gilles, 2014. "Interest Rates Rigidities and the Fisher Equation," MPRA Paper 54705, University Library of Munich, Germany.
  7. Hännikäinen, Jari, 2014. "Zero lower bound, unconventional monetary policy and indicator properties of interest rate spreads," MPRA Paper 56737, University Library of Munich, Germany.

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