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Can We Predict Recessions?

Author

Listed:
  • Don Harding

    () (La Trobe University)

  • Adrian Pagan

    () (QUT and UTS)

Abstract

The 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?

Suggested Citation

  • Don Harding & Adrian Pagan, 2010. "Can We Predict Recessions?," NCER Working Paper Series 69, National Centre for Econometric Research.
  • Handle: RePEc:qut:auncer:2010_16
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    File URL: http://www.ncer.edu.au/papers/documents/WPNo69.pdf
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    Cited by:

    1. Nicholas Taylor, 2014. "Economic forecast quality: information timeliness and data vintage effects," Empirical Economics, Springer, vol. 46(1), pages 145-174, February.
    2. Kenny, Geoff & Morgan, Julian, 2011. "Some lessons from the financial crisis for the economic analysis," Occasional Paper Series 130, European Central Bank.
    3. Peláez, Rolando F., 2015. "A biannual recession-forecasting model," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 384-393.
    4. Geoff Kenny & Thomas Kostka & Federico Masera, 2015. "Can Macroeconomists Forecast Risk? Event-Based Evidence from the Euro-Area SPF," International Journal of Central Banking, International Journal of Central Banking, vol. 11(4), pages 1-46, December.
    5. Peláez, Rolando F., 2015. "Market-timing the business cycle," Review of Financial Economics, Elsevier, vol. 26(C), pages 55-64.

    More about this item

    Keywords

    Global Financial Crisis; Great Recession;

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