Working Paper: NBER ID: w19469
Authors: Serena Ng; Jonathan H. Wright
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.
Keywords: Great Recession; Forecasting; Macroeconomic Modeling; Business Cycles; Financial Markets
JEL Codes: C22; C32; E32; E37
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Financial market factors (G19) | Great Recession (G01) |
| Great Recession (G01) | Slower recoveries (E65) |
| Financial origins of recessions (G01) | Recovery processes (O31) |
| Increased leverage (G19) | Severity of the Great Recession (F44) |
| Financial crisis (G01) | Balance sheet recession (E62) |
| Balance sheet recession (E62) | Decreased demand (D12) |
| Financial market factors (G19) | Economic downturns (E32) |