A Real-Time Recession Indicator For The Euro Area

In this paper, the authors propose a new coincident monthly indicator to detect in real-time the start and the end of an economic recession phase for the Euro area. In this respect, they use the methodology proposed in Anas and Ferrara (2002, 2004) as regards the recession indicator for the US, based on Markov-Switching processes popularized in economics by Hamilton (1989). By using a set of four monthly time series, they show that this Start-End Recession Indicator (SERI) is able to reproduce all the recession phases experienced by the Euro area since 1970.