The Economic Impact of Recession Announcements

Martin Ellison, Andrew Eggers and Sang Seok Lee

No 15466, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The convention in the news media is to announce a recession if a country experiences two consecutive quarters of negative growth. We exploit the arbitrary threshold implied by this practice to identify the economic impact of recession announcements through a Regression Discontinuity Design (RDD). Estimation results show that news of a recession leads to a discontinuous fall in consumer confidence, consumption growth and final estimates of GDP growth in a panel of countries. The effect is large, robust and statistically significant.

Date: 2020-11
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Related works:
Journal Article: The economic impact of recession announcements (2021)
Working Paper: The Economic Impact of Recession Announcements (2020)
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