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Let’s separate the two first. Clearly we can move the start date for recession by changing interest rates and pumping money into the economy. I think you agree
by kmonsen 4y ago
Let’s separate the two first. Clearly we can move the start date for recession by changing interest rates and pumping money into the economy. I think you agree on this? If so that would mess with predictions which is what I said.
Can recessions be prevented. I think it is believed they can. The theory is juice the economy on hard times and pump the brakes in good times. This the depends on two things, ability to know what is good and bad times which I personally depends to some extent on predicting the future. I think it also depends on being able to use the brakes in good times which we did not do, the Trump tax cuts clearly should not have happened if this was the goal.
So even though I believe in the Keynesian model I agree with you that it might not work in practice. But it is mostly working right now, although clearly not 100%.
But I think the evidence is quite clear that the timing and severity of a recession can be influenced by monetary policy, and if you agree with that you probably agree that predictions of recession are not going to work 100% even if there was a clear way of predicting them.
- mym1990 4y agoI’m a bit confused, when would we be in hard times but not in a recession? During the summer of 2020 we were already in a recession, and in response the stimulus and pumping was done. This is on top of the fact that not only are we not able to predict recessions accurately, we usually don’t even know we are in one until we are 3-6 months into it. “It is believed they can”…by who? Other than you of course. The severity of a recession is determined by what is done in the early days of the recession, not before.