erc/metu
INTERNATIONAL CONFERENCE IN ECONOMICS  IV
September 13-16, 2000, Ankara

Forecasting the Frequency of Recessions

Simon Potter (Federal Reserve Bank of New York, USA)

Abstract

The US economy has experienced only one recession in the last seventeen years. This follows a period of nearly 150 years when the US had experienced recessions on average every four to five years. Using Bayesian methods simple autoregressive models allowing for structural breaks are estimated. The implied frequency of future recessions from these models is considerably lower than past experience whereas the models match the historical frequency of recession. Keywords: Recession, Business Cycle, Bayesian Methods.

Economic Research Center
Middle East Technical University
06531 Ankara Turkey
Phone: + 90 312 210 3044, 210 2003
Fax: +90 312 210 1244
e-mail: metuerc@metu.edu.tr