Discussion paper

DP15466 The Economic Impact of Recession Announcements

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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Citation

Eggers, A, M Ellison and S Lee (2020), ‘DP15466 The Economic Impact of Recession Announcements‘, CEPR Discussion Paper No. 15466. CEPR Press, Paris & London. https://cepr.org/publications/dp15466