Master of Arts / Department of Economics / Lloyd B. Thomas / A negative-sloped Treasury curve is often cited in financial news articles and by Federal Reserve economists as a predictor of recessions. This report reviews previously published research examining the reliability of yield curves predicting recessions. Findings show that the yield curve inverts two or more quarters before recessions, with short-term interest rates rising above long-term interest rates. Probit regression has proven a reliable method for generating estimated probabilities of future recessions that, in turn, are useful for both monetary policy and asset allocation decision-making.
| Identifer | oai:union.ndltd.org:KSU/oai:krex.k-state.edu:2097/13760 |
| Date | January 1900 |
| Creators | Lahman, John William |
| Publisher | Kansas State University |
| Source Sets | K-State Research Exchange |
| Language | en_US |
| Detected Language | English |
| Type | Report |
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