Discussion Paper Details

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Title: The Economic Impact of Recession Announcements

Author(s): Andrew Eggers, Martin Ellison and Sang Seok Lee

Publication Date: November 2020


Programme Area(s): Monetary Economics and Fluctuations

Abstract: The convention in the news media is to announce a recession if a country experiences two consecutive quarters of negative growth. We exploit the arbitrary threshold implied by this practice to identify the economic impact of recession announcements through a Regression Discontinuity Design (RDD). Estimation results show that news of a recession leads to a discontinuous fall in consumer confidence, consumption growth and final estimates of GDP growth in a panel of countries. The effect is large, robust and statistically significant.

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Bibliographic Reference

Eggers, A, Ellison, M and Lee, S. 2020. 'The Economic Impact of Recession Announcements'. London, Centre for Economic Policy Research.