Confidence indexes and the probability of recession: a Markov switching model

Roy Batchelor ()

Indian Economic Review, 2001, vol. 36, issue 1, 107-124

Abstract: This paper uses a time-varying parameter Markov switching model to measure linkages between business confidence, consumer confidence, and the state of the economy in the US and the UK. Falling business confidence significantly increases the probability that growth will subsequently fall. Rising consumer confidence significantly increases the probability of recovery. But these relationships do not yield a reliable method for anticipating business cycle turning points.

JEL-codes: E32 E37 (search for similar items in EconPapers)
Date: 2001
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