Is Germany in a Recession? And if so, would we have predicted it?

In Chinn and Ferrara (2024), we find substantial explanatory power for the 10yr-3mo, the 3 month rate, and the debt service ratio for German recessions (our analysis we also covered Canada, France, Italy, Japan, Sweden, and UK). Our sample extended up to 2022M12 (using spreads up to 2021M12), as we were unsure about recession in 2023. With Germany in a possible slowdown, it’s of interest to consider what our model would have predicted.

 


Continue reading