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Those Unpredictable Recessions

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  • Sergey Smirnov

    ()
    (Higher School of Economics (Moscow, Russia), ‘Development Center’ Institute)

Abstract

Contemporary global economic life is measured in days and hours, but most common economic indicators have inevitable lags of months and sometimes quarters (GDP). Moreover, the real-time picture of economic dynamics may differ in some sense from the same picture in its historical perspective, because all fluctuations receive their proper weights only in the context of the whole. Therefore, it’s important to understand whether the existing indicators are really capable of providing important information for decision-makers. In other words, could they be useful in real-time? Why then was it so difficult for the experts to recognize the turning points in real time? What hampers this ability to recognize? Can a turning points’ forecast be entirely objective? The paper answers these questions in terms of three cyclical indicators for the USA (LEI by the Conference Board, CLI by OECD and PMI by ISM) during the last 2008–2009 recession

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Bibliographic Info

Paper provided by National Research University Higher School of Economics in its series HSE Working papers with number WP BRP 02/EC/2011.

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Length: 24 pages
Date of creation: 2011
Date of revision:
Publication status: Published in WP BRP Series: Economics / EC, November 2011, pages 1-24
Handle: RePEc:hig:wpaper:02/ec/2011

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Keywords: Business cycle; leading indicators; turning points; biased forecasts.;

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References

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  20. Layton, Allan P. & Katsuura, Masaki, 2001. "Comparison of regime switching, probit and logit models in dating and forecasting US business cycles," International Journal of Forecasting, Elsevier, vol. 17(3), pages 403-417.
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