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EWS = “Early Warning System”. Jamel Saadaoui has an attention-grabbing blogpost, investigating whether or not the median present account to GDP stability — specifically when it turns into very detrimental, -2% to -4% — presages a world recession as outlined by Kose et al. (2020).
Source: Saadaoui (2025).
As Saadaoui notes, there’s not an ideal file — there’s a false optimistic in 2022Q3 (nicely, Kose et al. is 2020, so didn’t assess this episode), and appears roughly contemporaneous reasonably than main within the 1974 and 1990-91 recessions.
Nonetheless, even when not constituting a essentially a extremely dependable early warning system, that is an attention-grabbing stylized truth. Why ought to the median CAB be related to a world recession? I conjecture massive median deficits would imply a number of international locations are working deficits, with a couple of offsetting surpluses. This in flip signifies that economies typically are working scorching simply earlier than adjustment takes place. Just a surmise on my half.
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