Can We Predict Recessions?
AbstractThe fact that the Global Financial Crisis, and the Great Recession it ushered in, was largely unforeseen, has led to the common opinion that macroeconomic models and analysis is deficient in some way. Of course it has probably always been true that businessmen, journalists and politicians have agreed on the proposition that economists can't forecast recessions. Yet we see an enormous published literature that presents results which suggest it is possible to do so, either with some new model or some new estimation method e.g. Kaufman (2010), Galvao (2006), Dueker (2005), Wright (2006) and Moneta (2005). Moreover, there seem to be no shortage of papers still emerging that make claims along these lines. So a question that naturally arises is how one is to reconcile the existence of an expanding literature on predicting recessions with the scepticism noted above?
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Bibliographic InfoPaper provided by National Centre for Econometric Research in its series NCER Working Paper Series with number 69.
Length: 31 pages
Date of creation: 09 Dec 2010
Date of revision:
Global Financial Crisis; Great Recession;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-12 (All new papers)
- NEP-CBA-2011-03-12 (Central Banking)
- NEP-ECM-2011-03-12 (Econometrics)
- NEP-HPE-2011-03-12 (History & Philosophy of Economics)
- NEP-MAC-2011-03-12 (Macroeconomics)
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- Kenny, Geoff & Morgan, Julian, 2011. "Some lessons from the financial crisis for the economic analysis," Occasional Paper Series 130, European Central Bank.
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