Identifying economic crises: insights from history. (19th May 2015)

• Record Type: Journal Article
• Authors: De Scheemaekere, Xavier; Oosterlinck, Kim; Szafarz, Ariane
• Is Part Of: Financial history review. Volume 22:Number 1(2015)
• Page Start: 1
• Page End: 18
• Publication Date: 2015-05-19
• Subjects: economic crisis, -- economic history, -- single-case probability, -- epistemology; B40, -- G01, -- G17, -- N00; Finance -- History -- Periodicals; Banks and banking -- History -- Periodicals; Banks and banking -- Europe -- History -- Periodicals; 330.09
• DOI: 10.1017/S0968565015000025
• Languages: English
• ISSNs: 0968-5650

Abstract

Abstract : Economists have been blamed for their inability to forecast and address crises. This article attributes this inability to intertwined factors: the lack of a coherent definition of crises, the reference-class problem, the lack of imagination regarding the nature of future crises and sample-selection biases. Specifically, economists tend to adapt their views on crises to recent episodes, and omit averted and potential crises. Threshold-based definitions of crises run the risk of being ad hoc. Using historical examples, this article highlights some epistemological shortcomings of the current approach.