Identifying economic crises: insights from history
Published online by Cambridge University Press: 19 May 2015
Economists have been blamed for their inability to forecast and address crises. This article attributes this inability to intertwined factors: the lack of a coherent definition of crises, the reference-class problem, the lack of imagination regarding the nature of future crises and sample-selection biases. Specifically, economists tend to adapt their views on crises to recent episodes, and omit averted and potential crises. Threshold-based definitions of crises run the risk of being ad hoc. Using historical examples, this article highlights some epistemological shortcomings of the current approach.
- The past mirror: notes, surveys, debates
- Copyright © European Association for Banking and Financial History e.V. 2015