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The Prediction of Business Cycle Phases: Financial Variables and International Linkages

Published online by Cambridge University Press:  26 March 2020

Denise R. Osborn
Centre for Growth and Business Cycle Research, School of Economic Studies, University of Manchester, Manchester, M13 9PL
Marianne Sensier*
Centre for Growth and Business Cycle Research, School of Economic Studies, University of Manchester, Manchester, M13 9PL


This paper discusses recent research at the Centre for Growth and Business Cycle Research on the prediction of the expansion and recession phases of the business cycle for the UK, US, Germany, France and Italy. Financial variables are important predictors in these models, with the stock market playing a key role in the US but not the European countries, including the UK. In contrast, international linkages are important for the European countries. Our models suggest that the US and German economies have now emerged from the recession of 2001, and that all five countries will be in expansion during the third quarter of this year.

Copyright © 2002 National Institute of Economic and Social Research

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The authors would like to thank the Leverhulme Trust for financial support under the project ‘International Growth and Business Cycles’. We would also like to acknowledge that this paper draws heavily on work with our CGBCR colleagues, Chris Birchenhall and Mike Artis, without implicating them in any errors herein.


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