'Animal spirits' and expectations in U.S. recession forecasting

Elliott Middleton

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arXiv · nlin/0108012

'Animal spirits' and expectations in U.S. recession forecasting

Elliott Middleton

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Abstract

A two-variable model is developed to forecast the probability of recession in the U.S. economy. Like many others, the model uses data a year or more old to explain movements of a dichotomous dependent variable for recession. The innovation of the present effort is the introduction of a confidence variable, which appears to increase the qualitative accuracy and structural stability of the model in validation testing compared to others.

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Elliott Middleton. 2001-08-23. 'Animal spirits' and expectations in U.S. recession forecasting. https://arxiv.org/abs/nlin/0108012

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