{
  "title": "How Policy Makers Can Better Predict a Downturn – and Prepare",
  "publication": "IMF Blog, October 3, 2017",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2017/10/03/how-policy-makers-can-better-predict-a-downturn-and-prepare",
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  "summary": "The global financial crisis of 2008-2009 illustrated how periods of robust growth and calm financial markets can be followed by sudden market volatility and an unexpected economic downdraft.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- The global financial crisis of 2008-2009 illustrated how periods of robust growth and calm financial markets can be followed by sudden market volatility and an unexpected economic downdraft.\n- Financial conditions—including bond yields, oil prices, foreign exchange rates, and levels of domestic debt—provide valuable clues to the economic outlook and can improve the accuracy of forecasts.\n- New analysis in the Global Financial Stability Report develops a tool that uses information in financial conditions to quantify risks to future growth and help policy makers take preventive steps."
    },
    {
      "heading": "How the new tool helps predict downturns",
      "content": "- The tool identifies conditions that often precede trouble within 12 months:\n  - rising market volatility\n  - more risk-aversion among investors\n  - widening of credit spreads (the difference in yield between ultra-safe securities such as US Treasury notes and other forms of debt)\n- Over a period of two to three years, elevated levels of debt and credit growth are better signals of a challenging outlook."
    },
    {
      "heading": "Dynamics during \"good times\"",
      "content": "- Low interest rates and rising asset prices can encourage risky behavior by firms and households.\n- Consequences described:\n  - increased borrowing and lending fueled by easier underwriting standards\n  - boosted collateral values, bank capital, and profits\n  - eventual market recognition of built-up vulnerabilities can trigger rapid increases in funding costs, tightening of credit, cascades of defaults, and bank failures\n- Historical reference: the crisis culminated in the most severe recession since the 1930s."
    },
    {
      "heading": "Commodity prices and differing country effects",
      "content": "- The importance of any given gauge depends on the type of economy.\n- Examples:\n  - Rising commodity prices benefit exporters such as Australia, Canada, and Brazil.\n  - Rising commodity prices increase the risk of a downturn in commodity-importing countries."
    },
    {
      "heading": "What financial conditions signaled at the time of the analysis",
      "content": "- Credit spreads are low and market volatility is low, suggesting a relatively benign near-term outlook.\n- Growing debt levels signal risks down the road.\n- A rapid increase in credit spreads and greater market volatility could significantly worsen the outlook for global growth."
    },
    {
      "heading": "Policy recommendations and options",
      "content": "- Use macroprudential measures to curb credit growth and reduce the risk of a slump, including:\n  - requiring banks to hold more capital as a buffer against losses\n  - requiring families to make bigger down-payments on the homes they buy\n- Once a crisis appears imminent, policy options include:\n  - cutting central bank policy rates\n  - deploying measures used during the last crisis, such as asset-purchase programs and emergency liquidity facilities\n\nClaudio Raddatz Kiefer, Jay Surti — October 3, 2017. How Policy Makers Can Better Predict a Downturn – and Prepare.\n\n---\n\n Content in this bundle\n\n- 政策制定者怎样能更好预测经济衰退——并做好准备？IMF博客;2017 年10 月3 日\n  - 政策制定者怎样能更好预测经济衰退——并做好准备？IMF博客;2017 年10 月3 日 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 政策制定者怎样能更好预测经济衰退——并做好准备？IMF博客;2017 年10 月3 日 (PDF){rel=\"external\" type=\"application/pdf\"}\n- 景気後退の予測と政策対応;  クラウディオ・ラッダッツ、ジェイ・スルティ; IMF ブログ 2017年10月3日掲載\n  - 景気後退の予測と政策対応;  クラウディオ・ラッダッツ、ジェイ・スルティ; IMF ブログ 2017年10月3日掲載 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 景気後退の予測と政策対応;  クラウディオ・ラッダッツ、ジェイ・スルティ; IMF ブログ 2017年10月3日掲載 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Как директивные органы могут лучше прогнозировать спад и подготовиться к нему\n  - Как директивные органы могут лучше прогнозировать спад и подготовиться к нему (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Как директивные органы могут лучше прогнозировать спад и подготовиться к нему (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- عربي\n- https://www.imf.org/wp-content/uploads/2017/10/BLOG-1024x600-GFSR-CH-3-Singapore-stock-exchange.jpg\n- Global Financial Stability Report\n- https://www.imf.org/wp-content/uploads/2017/10/ENGSept27GFSRch31.png\n- https://www.imf.org/wp-content/uploads/2017/10/ENGSept27GFSRch32-2.jpg\n\nSource: https://www.imf.org/en/blogs/articles/2017/10/03/how-policy-makers-can-better-predict-a-downturn-and-prepare"
    }
  ],
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    "[Markdown version](/en/blogs/articles/2017/10/03/how-policy-makers-can-better-predict-a-downturn-and-prepare/index.md)",
    "[Structured JSON version](/en/blogs/articles/2017/10/03/how-policy-makers-can-better-predict-a-downturn-and-prepare/index.json)",
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    "Authors: Claudio Raddatz, Jay Surti",
    "Published: October 3, 2017",
    "The global financial crisis of 2008-2009 illustrated how periods of robust growth and calm financial markets can be followed by sudden market volatility and an unexpected economic downdraft.",
    "Financial conditions—including bond yields, oil prices, foreign exchange rates, and levels of domestic debt—provide valuable clues to the economic outlook and can improve the accuracy of forecasts.",
    "New analysis in the Global Financial Stability Report develops a tool that uses information in financial conditions to quantify risks to future growth and help policy makers take preventive steps.",
    "The tool identifies conditions that often precede trouble within 12 months:",
    "Over a period of two to three years, elevated levels of debt and credit growth are better signals of a challenging outlook.",
    "Low interest rates and rising asset prices can encourage risky behavior by firms and households.",
    "Consequences described:",
    "Historical reference: the crisis culminated in the most severe recession since the 1930s.",
    "The importance of any given gauge depends on the type of economy.",
    "Examples:",
    "Credit spreads are low and market volatility is low, suggesting a relatively benign near-term outlook.",
    "Growing debt levels signal risks down the road.",
    "A rapid increase in credit spreads and greater market volatility could significantly worsen the outlook for global growth.",
    "Use macroprudential measures to curb credit growth and reduce the risk of a slump, including:",
    "Once a crisis appears imminent, policy options include:",
    "**政策制定者怎样能更好预测经济衰退——并做好准备？IMF博客;2017 年10 月3 日**",
    "**景気後退の予測と政策対応;  クラウディオ・ラッダッツ、ジェイ・スルティ; IMF ブログ 2017年10月3日掲載**",
    "**Как директивные органы могут лучше прогнозировать спад и подготовиться к нему**",
    "[عربي](https://blog-montada.imf.org/?p=5632)",
    "[https://www.imf.org/wp-content/uploads/2017/10/BLOG-1024x600-GFSR-CH-3-Singapore-stock-exchange.jpg](https://www.imf.org/wp-content/uploads/2017/10/BLOG-1024x600-GFSR-CH-3-Singapore-stock-exchange.jpg)",
    "[Global Financial Stability Report](http://www.imf.org/en/Publications/GFSR/Issues/2017/09/27/global-financial-stability-report-october-2017)",
    "[https://www.imf.org/wp-content/uploads/2017/10/ENG_Sept_27_GFSR_ch_3_1.png](https://www.imf.org/wp-content/uploads/2017/10/ENG_Sept_27_GFSR_ch_3_1.png)",
    "[https://www.imf.org/wp-content/uploads/2017/10/ENG_Sept_27_GFSR_ch_3_2-2.jpg](https://www.imf.org/wp-content/uploads/2017/10/ENG_Sept_27_GFSR_ch_3_2-2.jpg)"
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