The economic impact of recession announcements
Date
2021-03-19
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Source Title
Journal of Monetary Economics
Print ISSN
0304-3932
Electronic ISSN
1873-1295
Publisher
Elsevier
Volume
120
Issue
Pages
40 - 52
Language
English
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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.