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Forecasting the Depression: Harvard Versus Yale

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Author Info
Ray C. Fair () (Cowles Foundation, Yale University)
Matthew D. Shapiro (Cowles Foundation, Yale University)
Kathryn M. Dominguez

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Abstract

Was the Depression forecastable? After the Crash, how long did it take contemporary economic forecasters to realize how severe the downturn was going to be? How long should it have taken them to come to this realization? These questions are addressed by studying the predictions of the Harvard Economic Service and Yale's Irving Fisher during 1929 and the early 1930's. The data assembled by the Harvard and Yale forecasters are subjected to modern statistical analysis to learn whether their verbal pronouncements were consistent with the data. We find that both the Harvard and Yale forecasters were systematically too optimistic, yet nothing in the data suggests that the optimum was unwarranted.

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File URL: http://cowles.econ.yale.edu/P/cp/p07a/p0710.pdf
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File URL: http://cowles.econ.yale.edu/P/cd/d08a/d0808.pdf
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Publisher Info
Paper provided by Cowles Foundation, Yale University in its series Cowles Foundation Discussion Papers with number 808.

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Length: 38 pages
Date of creation: Nov 1986
Date of revision:
Publication status: Published in American Economic Review (1988), 78(4): 595-596
Handle: RePEc:cwl:cwldpp:808

Note: CFP 710.
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Postal: Yale University, Box 208281, New Haven, CT 06520-8281 USA
Phone: (203) 432-3702
Fax: (203) 432-6167
Web page: http://cowles.econ.yale.edu/
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Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA

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Keywords: Depression; forecasting;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Gregory Mankiw, N. & Shapiro, Matthew D., 1985. "Trends, random walks, and tests of the permanent income hypothesis," Journal of Monetary Economics, Elsevier, vol. 16(2), pages 165-174, September. [Downloadable!] (restricted)
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  2. Romer, Christina D, 1986. "Is the Stabilization of the Postwar Economy a Figment of the Data?," American Economic Review, American Economic Association, vol. 76(3), pages 314-34, June. [Downloadable!] (restricted)
  3. Hamilton, James D., 1987. "Monetary factors in the great depression," Journal of Monetary Economics, Elsevier, vol. 19(2), pages 145-169, March. [Downloadable!] (restricted)
  4. Nelson, Charles R & Kang, Heejoon, 1981. "Spurious Periodicity in Inappropriately Detrended Time Series," Econometrica, Econometric Society, vol. 49(3), pages 741-51, May. [Downloadable!] (restricted)
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  5. Mankiw, N Gregory & Miron, Jeffrey A & Weil, David N, 1987. "The Adjustment of Expectations to a Change in Regime: A Study of the Founding of the Federal Reserve," American Economic Review, American Economic Association, vol. 77(3), pages 358-74, June. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Eugene N. White & John Landon-Lane & Adam Klug, 2002. "How Could Everyone Have Been So Wrong? Forecasting The Great Depression With The Railroads," Departmental Working Papers 200209, Rutgers University, Department of Economics. [Downloadable!]
    Other versions:
  2. Christina Romer & Jeffrey A. Miron, 1989. "A New Monthly Index of Industrial Production, 1884-1940," NBER Working Papers 3172, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Randall E. Parker & Phillip Rothman & Original: August 2000. This version: June 2003., . "An Examination of the Asymmetric Effects of Money Supply Shocks in the Pre-World War I and Interwar Periods," Working Papers 0302, East Carolina University, Department of Economics. [Downloadable!]
    Other versions:
  4. Ritschl, Albrecht & Wolf, Nikolaus, 2003. "Endogeneity of Currency Areas and Trade Blocs: Evidence from the Inter-war Period," CEPR Discussion Papers 4112, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  5. Giovanni Favero, 2007. "Weather forecast or rain-dance? On inter-war business barometers," Working Papers 2007_14, University of Venice "Ca' Foscari", Department of Economics. [Downloadable!]
  6. Ritschl, Albrecht & Woitek, Ulrich, 2000. "Did Monetary Forces Cause the Great Depression?," CEPR Discussion Papers 2547, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  7. Albrecht Ritschl & Ulrich Woitek, . "Did Monetary Forces Cause the Great Depression? A Bayesian VAR Analysis for the U.S. Economy," IEW - Working Papers iewwp050, Institute for Empirical Research in Economics - IEW. [Downloadable!]
    Other versions:
  8. Peter Rappoport & Eugene N. White, 1991. "Was there a bubble in the 1929 Stock Market?," NBER Working Papers 3612, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  9. Henry, Peter B., 2001. "Is Disinflation Good for the Stock Market?," Research Papers 1681, Stanford University, Graduate School of Business. [Downloadable!]
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  10. Escañuela Romana, Ignacio, 2009. "Los Barómetros de Harvard: ¿Permitían Pedecir la Depresión de 1929?
    [Harvard Barometers: Did they allow to predict the Great Depression of 1929?]    ," MPRA Paper 16411, University Library of Munich, Germany. [Downloadable!]
  11. Ellen R. McGrattan & Edward C. Prescott, 2003. "The 1929 stock market: Irving Fisher was right," Staff Report 294, Federal Reserve Bank of Minneapolis. [Downloadable!]
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  12. Voth, Hans-Joachim, 2002. "With a Bang, Not a Whimper: Pricking Germany's 'Stock Market Bubble' in 1927 and the Slide into Depression," CEPR Discussion Papers 3257, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  13. Stephen G. Cecchetti, 1997. "Understanding the Great Depression: Lessons for Current Policy," NBER Working Papers 6015, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. Stephen G. Cecchetti, 1989. "Prices during the Great Depression: Was the Deflation of 1930-32 really unanticipated?," NBER Working Papers 3174, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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