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Identifying economic crises: insights from history

Published online by Cambridge University Press:  19 May 2015

Xavier De Scheemaekere ,
Kim Oosterlinck  and
Ariane Szafarz
Xavier De Scheemaekere
Affiliation:
Université Libre de Bruxelles
Kim Oosterlinck*
Affiliation:
Université Libre de Bruxelles
Ariane Szafarz
Affiliation:
Université Libre de Bruxelles
*
K. Oosterlinck, corresponding author: Université Libre de Bruxelles, SBS-EM, CEB, koosterl@ulb.ac.be
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Abstract

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.

Keywords

economic crisiseconomic historysingle-case probabilityepistemology

JEL classification

G01: Financial Crises G17: Financial Forecasting and Simulation B40: General N00: General
Type
The past mirror: notes, surveys, debates
Information
Financial History Review , Volume 22 , Issue 1 , April 2015 , pp. 1 - 18
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Copyright
Copyright © European Association for Banking and Financial History e.V. 2015 

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