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The Financial Crisis from a Forecaster's Perspective

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Drechsel, K., Scheufele, R. The Financial Crisis from a Forecaster's Perspective. Credit and Capital Markets – Kredit und Kapital, 45(1), 1-26. https://doi.org/10.3790/kuk.45.1.1
Drechsel, Katja and Scheufele, Rolf "The Financial Crisis from a Forecaster's Perspective" Credit and Capital Markets – Kredit und Kapital 45.1, 2012, 1-26. https://doi.org/10.3790/kuk.45.1.1
Drechsel, Katja/Scheufele, Rolf (2012): The Financial Crisis from a Forecaster's Perspective, in: Credit and Capital Markets – Kredit und Kapital, vol. 45, iss. 1, 1-26, [online] https://doi.org/10.3790/kuk.45.1.1

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The Financial Crisis from a Forecaster's Perspective

Drechsel, Katja | Scheufele, Rolf

Credit and Capital Markets – Kredit und Kapital, Vol. 45 (2012), Iss. 1 : pp. 1–26

6 Citations (CrossRef)

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Article Details

Author Details

Dr. Katja Drechsel, Institut für Wirtschaftsforschung Halle (IWH), Abteilung Makroökonomik, Kleine Märkerstraße 8, D-06108 Halle (Saale)

Dr. Rolf Scheufele, Schweizerische Nationalbank, Börsenstraße 15, CH-8022 Zürich

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Abstract

The Financial Crisis from a Forecaster's Perspective

This paper analyses the recession in 2008/2009 in Germany. This recession is very different from previous recessions in particular regarding their causes and magnitude. We show to what extent forecasters and forecasts based on leading indicators fail to detect the timing and the magnitude of the recession. This study shows that large forecast errors for both expert forecasts and forecasts based on leading indicators resulted during this recession which implies that the recession was very difficult to forecast. However, some leading indicators (survey data, risk spreads, stock prices) have indicated an economic downturn and hence, beat univariate time series models. Although the combination of individual forecasts provides an improvement compared to the benchmark model, the combined forecasts are worse than several individual models. A comparison of expert forecasts with the best forecasts based on leading indicators shows only minor deviations. Overall, the range for an improvement of expert forecasts in the crisis compared to indicator forecasts is small. (JEL E37, C53)