Can We Predict Recessions?

Don Harding and Adrian Pagan

No 69, NCER Working Paper Series from National Centre for Econometric Research

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?

Keywords: Global Financial Crisis; Great Recession (search for similar items in EconPapers)
Pages: 31 pages
Date: 2010-12-09
New Economics Papers: this item is included in nep-cba, nep-ecm, nep-hpe and nep-mac
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Citations: View citations in EconPapers (13)

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