{"id":277767,"date":"2025-06-01T20:03:47","date_gmt":"2025-06-01T20:03:47","guid":{"rendered":"https:\/\/michigandigitalnews.com\/index.php\/2025\/06\/01\/global-imbalances-as-global-recession-ews\/"},"modified":"2025-06-25T17:08:12","modified_gmt":"2025-06-25T17:08:12","slug":"global-imbalances-as-global-recession-ews","status":"publish","type":"post","link":"https:\/\/michigandigitalnews.com\/index.php\/2025\/06\/01\/global-imbalances-as-global-recession-ews\/","title":{"rendered":"Global Imbalances as Global Recession EWS?"},"content":{"rendered":"

[ad_1]
\n<\/p>\n

\n\t\t\t\t<\/p>\n
\n

EWS = \u201cEarly Warning System\u201d. Jamel Saadaoui<\/a> has an interesting blogpost, investigating whether the median<\/em><\/strong> current account to GDP balance \u2014 namely when it becomes very negative, -2% to -4% \u2014 presages a global recession as defined by Kose et al. (2020)<\/a>.<\/p>\n

\"\"<\/a><\/p>\n

Source:<\/strong> Saadaoui (2025)<\/a>.<\/em><\/p>\n

As Saadaoui notes, there\u2019s not a perfect record \u2014 there\u2019s a false positive in 2022Q3 (well, Kose et al. is 2020, so didn\u2019t assess this episode), and seems roughly contemporaneous rather than leading in the 1974 and 1990-91 recessions.<\/p>\n

Nonetheless, even if not constituting a necessarily a highly reliable early warning system, this is an interesting stylized fact. Why should the median CAB be associated with a global recession? I conjecture large median deficits would mean lots of countries are running deficits, with a few offsetting surpluses. This in turn means that economies in general are running hot just before adjustment takes place. Just a surmise on my part.<\/p>\n

\u00a0<\/p>\n<\/p><\/div>\n

<\/p>\n