EconPapers    
Economics at your fingertips  
 

The failure to predict the Great Recession. The failure of academic economics? A view focusing on the role of credit

María Gadea () and Gabriel Pérez-Quirós
Authors registered in the RePEc Author Service: Gabriel Perez Quiros

No 9269, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Much has been written about why economists failed to predict the latest financial and real crisis. Reading the recent literature, it seems that the crisis was so obvious that economists must have been blind when looking at data not to see it coming. In this paper, we illustrate this failure by looking at one of the most cited and relevant variables in this analysis, the now infamous credit to GDP chart. We compare the conclusions reached in the literature after the crisis with the results that could have been drawn from an ex ante analysis. We show that, even though credit affects the business cycle in both the expansion and the recession phases, this effect is almost negligible and impossible to exploit from a policymaker’s point of view.

Keywords: Business Cycles; Credit; Financial Crisis; Forecasting (search for similar items in EconPapers)
JEL-codes: C22 E32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-for and nep-hpe
Date: 2012-12
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=9269 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: The failure to predict the Great Recession. The failure of academic economics? A view focusing on the role of credit (2012) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:9269

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=9269

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ..
Series data maintained by (). This e-mail address is bad, please contact .

 
Page updated 2017-12-14
Handle: RePEc:cpr:ceprdp:9269