The financial cycle and recession risk
Claudio Borio (),
Mathias Drehmann () and
BIS Quarterly Review, 2018
Financial cycle booms can end in crises and, even if they do not, they tend to weaken growth. Given their slow build-up, do they convey information about recession risk? We compare the predictive performance of different financial cycle proxies with that of the term spread - a popular recession indicator. In contrast to much of the literature, our analysis covers a large sample of advanced and emerging market economies. We find that, in general, financial cycle measures provide valuable information and tend to outperform the term spread.
JEL-codes: C33 E37 E44 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:bisqtr:1812g
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