Yield Curve: Predicting Recessions

Erik Norland and Blu Putnam

Chapter 4 in Economics Gone Astray, 2019, pp 45-57 from World Scientific Publishing Co. Pte. Ltd.

Abstract: One of the rarely stated but nevertheless implied tenants of most schools of economic thought, including monetarism and Keynesianism, is that economic downturns are unpredictable and arrive randomly. In this chapter, we present evidence that this is not the case. Rather, the economy moves in cycles that are governed by a feedback loop in which monetary policy both drives changes in unemployment, credit spreads and equity index volatility and, in turn, reacts to those same three variables…

Keywords: Economics; Macroeconomics; Monetary Policy; Fiscal Policy; Inflation; Risk Management; Federal Reserve; Quantitative Easing; Taylor Rule (search for similar items in EconPapers)
JEL-codes: E02 E44 E52 E6 G32 (search for similar items in EconPapers)
Date: 2019
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