Facts and Challenges from the Great Recession for Forecasting and Macroeconomic Modeling

45 Pages Posted: 2 Oct 2013 Last revised: 14 Mar 2021

See all articles by Serena Ng

Serena Ng

Columbia Business School - Economics Department

Jonathan H. Wright

Johns Hopkins University - Department of Economics

Date Written: September 2013

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 post-war recessions in the US 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.

Suggested Citation

Ng, Serena and Wright, Jonathan H., Facts and Challenges from the Great Recession for Forecasting and Macroeconomic Modeling (September 2013). NBER Working Paper No. w19469, Available at SSRN: https://ssrn.com/abstract=2334576

Serena Ng (Contact Author)

Columbia Business School - Economics Department ( email )

420 West 118th Street
New York, NY 10027
United States

Jonathan H. Wright

Johns Hopkins University - Department of Economics ( email )

3400 Charles Street
Baltimore, MD 21218-2685
United States

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