alexban
After more than 20 years of research prof. Alexander Bandura proposed unique and original model of business cycle named him as a resource model. This model is considered to be the first general one that would explain and forecast in real time economic cycles for any market conditions. That is the model can be applied to any economic conditions, to any country with the same efficiency. And the resource model was successfully tested using the USA (a period of consideration is 42 years) and Spanish (a period of consideration is 18 years) economies as the patterns.
Although various typical models significantly differ from each other, one can highlight common drawbacks that can partially explain the inability to accurately forecast the turning points of business cycles. Those drawbacks primarily include: 1) multiple assumptions that simplify the reality of things (price and wage flexibility, ceteris paribus, etc.) and make a model applicable only to certain specific market conditions; 2) existence of the time lag when identifying the balance of supply and demand and primary macroeconomic indicators; 3) false signals of the turning points of an economic cycle or a recession identification.
Author eliminated these drawbacks within the resource model of business cycles. As a result the model provides opportunity to forecast definitely the recession and financial crises starting points. Also it allows us separate recession from slowdown for any period of real time. The model main advantages are: no false signals for recession starting point forecasting; early recession identification – up to 12-24 months and financial shocks – up to 2-4 months before inception (before the exchange falling down). It was demonstrated when the recession and financial shocks starting point for the U.S. economy during the 2007-09 crisis forecasting.
Although various typical models significantly differ from each other, one can highlight common drawbacks that can partially explain the inability to accurately forecast the turning points of business cycles. Those drawbacks primarily include: 1) multiple assumptions that simplify the reality of things (price and wage flexibility, ceteris paribus, etc.) and make a model applicable only to certain specific market conditions; 2) existence of the time lag when identifying the balance of supply and demand and primary macroeconomic indicators; 3) false signals of the turning points of an economic cycle or a recession identification.
Author eliminated these drawbacks within the resource model of business cycles. As a result the model provides opportunity to forecast definitely the recession and financial crises starting points. Also it allows us separate recession from slowdown for any period of real time. The model main advantages are: no false signals for recession starting point forecasting; early recession identification – up to 12-24 months and financial shocks – up to 2-4 months before inception (before the exchange falling down). It was demonstrated when the recession and financial shocks starting point for the U.S. economy during the 2007-09 crisis forecasting.