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'Animal spirits' and expectations in U.S. recession forecasting

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  • Elliott Middleton

Abstract

A two-variable model is developed to forecast the probability of recession in the U.S. economy. Like many others, the model uses data a year or more old to explain movements of a dichotomous dependent variable for recession. The innovation of the present effort is the introduction of a confidence variable, which appears to increase the qualitative accuracy and structural stability of the model in validation testing compared to others.

Suggested Citation

  • Elliott Middleton, 2001. "'Animal spirits' and expectations in U.S. recession forecasting," Papers nlin/0108012, arXiv.org, revised Aug 2001.
    • Handle: RePEc:arx:papers:nlin/0108012
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    References listed on IDEAS

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    1. Arturo Estrella & Frederic S. Mishkin, 1996. "The yield curve as a predictor of U.S. recessions," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 2(Jun).
    2. Mark R. Greer, 1999. "Assessing the Soothsayers: An Examination of the Track Record of Macroeconomic Forecasting," Journal of Economic Issues, Taylor & Francis Journals, vol. 33(1), pages 77-94, March.
    3. D. J. Hand & W. E. Henley, 1997. "Statistical Classification Methods in Consumer Credit Scoring: a Review," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 160(3), pages 523-541, September.
    4. Elliott Middleton, 1986. "Some Testable Implications of a Preference for Subjective Novelty," Kyklos, Wiley Blackwell, vol. 39(3), pages 397-418, August.
    5. Middleton, Elliott, 1996. "Adaptation level and 'animal spirits'," Journal of Economic Psychology, Elsevier, vol. 17(4), pages 479-498, August.
    6. Estrella, Arturo, 1998. "A New Measure of Fit for Equations with Dichotomous Dependent Variables," Journal of Business & Economic Statistics, American Statistical Association, vol. 16(2), pages 198-205, April.
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