This paper reviews the possibility that Harvard barometers would have enabled to predict the Great Depression. Based on data from the ABC curves in August 1929, could have been foreseen the collapse of the stock market and the dramatic fall in economic activity?. It is now accepted that Harvard barometers did not allow to predict the crisis. This paper applies the harmonic analysis, a well-known method at the time of the barometers, and a number of significance tests used in that historic moment. Harvard barometers are analysed into sinusoid curves in order to, using the projection of these curves, check their forecast. The conclusion is: Harvard statisticians could have been able to foresee the fall on speculation, as defined in the curve A, but not the fall in business conditions and money and credit. Given this result, it is questioned first whether the detected regular fluctuations are an illusory effect of the composition of ABC curves, and second if it is useful to utilize such aggregate curves. It is concluded that, although aggregation does not have any predictive advantage, it is not the source of regularity.
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
16411.
Find related papers by JEL classification: C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Quantitative and Mathematical C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions
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