Journal of Economic Literature
ISSN 0022-0515 (Print) | ISSN 2328-8175 (Online)
Facts and Challenges from the Great Recession for Forecasting and Macroeconomic Modeling
Journal of Economic Literature
vol. 51,
no. 4, December 2013
(pp. 1120–54)
Abstract
This paper provides a survey of business cycle facts, updated to take account of recent data. Emphasis is given to the Great Recession, which was unlike most other postwar recessions in the United States in being driven by deleveraging and financial market factors. We document how recessions with financial market origins are different from those driven by supply or monetary policy shocks. This helps explain why economic models and predictors that work well at some times do poorly at other times. We discuss challenges for forecasters and empirical researchers in light of the updated business cycle facts.Citation
Ng, Serena, and Jonathan H. Wright. 2013. "Facts and Challenges from the Great Recession for Forecasting and Macroeconomic Modeling." Journal of Economic Literature, 51 (4): 1120–54. DOI: 10.1257/jel.51.4.1120Additional Materials
JEL Classification
- C53 Forecasting Models; Simulation Methods
- E32 Business Fluctuations; Cycles
- E37 Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Applications
- E43 Interest Rates: Determination, Term Structure, and Effects
- E44 Financial Markets and the Macroeconomy
- E52 Monetary Policy
- G01 Financial Crises