Predicting Recessions: A Regression (Probit) Model Approach

Forecasting recessions is fraught with difficulties: we never know if we are in recession until long after one has started. This makes it all the more important to try to predict in advance the likelihood of recession, so that businesses can plan accordingly. Peter takes us inside the economist's crystal ball, identifying key indicators of economic recession and how they can be combined into a predictive model. The model forecasts a difficult 2009. Copyright International Institute of Forecasters, 2009