Real-Time Weakness of the Global Economy: A First Assessment of the Coronavirus Crisis

60 Pages Posted: 25 Mar 2020

Multiple version iconThere are 3 versions of this paper

Date Written: March, 2020


We propose an empirical framework to measure the degree of weakness of the global economy in real-time. It relies on nonlinear factor models designed to infer recessionary episodes of heterogeneous deepness, and fitted to the largest advanced economies (U.S., Euro Area, Japan, U.K., Canada and Australia) and emerging markets (China, India, Russia, Brazil, Mexico and South Africa). Based on such inferences, we construct a Global Weakness Index that has three main features. First, it can be updated as soon as new regional data is released, as we show by measuring the economic effects of coronavirus. Second, it provides a consistent narrative of the main regional contributors of world economy's weakness. Third, it allows to perform robust risk assessments based on the probability that the level of global weakness would exceed a certain threshold of interest in every period of time.

Keywords: business cycles, factor model, international, nonlinear

JEL Classification: E32, C22, E27

Suggested Citation

Leiva-Leon, Danilo and Perez-Quiros, Gabriel and Rots, Eyno, Real-Time Weakness of the Global Economy: A First Assessment of the Coronavirus Crisis (March, 2020). ECB Working Paper No. 2381, Available at SSRN:

Danilo Leiva-Leon

Banco de España ( email )

Alcala 50
Madrid 28014

Gabriel Perez-Quiros (Contact Author)

Banco de España ( email )

Madrid 28014

Eyno Rots

Magyar Nemzeti Bank ( email )

Szabadsag ter 8-9
Budapest, H-1850

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics