Filtering labour market data optimally to detect recessions early and accurately
Sport
The timely detection of recessions is critical for policymakers to make informed decisions. This column presents an algorithm for detecting recessions early using labour market data. By combining unemployment and vacancy rates, it shows that a less noisy signal can be obtained compared to relying on a single measure like industrial production. Current official prediction practices might benefit from greater emphasis on unemployment and vacancies, as the labour market is already sending an
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