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Risk of recession for the German economy significantly higher

Author

Listed:
  • Kai Carstensen
  • Magnus Reif
  • Maik Wolters

Abstract

Is the economic slowdown of the German economy in the second half of 2018 an indication of a phase of short-term economic weakness, or can a prolonged recession be expected? Kai Carstensen of the University of Kiel, Magnus Reif of the ifo Institute, and Maik Wolters of the University of Jena estimate the current risk of recession using a dynamic, nonlinear factor model. Their results suggest that the risk of a recession is currently significantly higher and that a phase of economic weakness can also be expected in the coming quarters. This is indicated in particular by the ifo Institute’s survey data, which have been pointing downwards for some time.

Suggested Citation

  • Kai Carstensen & Magnus Reif & Maik Wolters, 2019. "Risk of recession for the German economy significantly higher," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 72(05), pages 28-31, March.
    • Handle: RePEc:ces:ifosdt:v:72:y:2019:i:05:p:28-31
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    References listed on IDEAS

    as
    1. Timo Wollmershäuser & Florian Eckert & Marcell Göttert & Christian Grimme & Carla Krolage & Stefan Lautenbacher & Robert Lehmann & Sebastian Link & Heiner Mikosch & Stefan Neuwirth & Wolfgang Nierhaus, 2019. "ifo Konjunkturprognose Winter 2019: Deutsche Konjunktur stabilisiert sich," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 72(24), pages 27-89, December.
    2. Carstensen, Kai & Heinrich, Markus & Reif, Magnus & Wolters, Maik H., 2020. "Predicting ordinary and severe recessions with a three-state Markov-switching dynamic factor model," International Journal of Forecasting, Elsevier, vol. 36(3), pages 829-850.
    3. Timo Wollmershäuser & Marcell Göttert & Christian Grimme & Carla Krolage & Stefan Lautenbacher & Robert Lehmann & Sebastian Link & Wolfgang Nierhaus & Ann-Christin Rathje & Magnus Reif & Radek Šauer &, 2018. "ifo Economic Forecast Winter 2018: Germany’s Economy Cools Down," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 71(24), pages 28-82, December.
    4. Heinrich, Markus & Carstensen, Kai & Reif, Magnus & Wolters, Maik, 2017. "Predicting Ordinary and Severe Recessions with a Three-State Markov-Switching Dynamic Factor Model. An Application to the German Business Cycle," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168206, Verein für Socialpolitik / German Economic Association.
    Full references (including those not matched with items on IDEAS)

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    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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