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How many times until a coincidence becomes a pattern? The case of yield curve inversions preceding recessions and the magical number 7.
- Source :
-
Communications in Statistics: Theory & Methods . 2024, Vol. 53 Issue 16, p5785-5792. 8p. - Publication Year :
- 2024
-
Abstract
- Let us say that a coincidence involving two events, where one seems to predict the other, happens a number of times. How many times until it can be considered not only a coincidence, but a statistically significant pattern? We propose a framework to answer this question. Using the framework, we find that the number of times required is 7. We illustrate the practical application of our framework in the context of a very important phenomenon: When the percentage difference between 10-year and 3-month U.S. Treasury yields falls below zero, a U.S. recession appears to occur within the next 18 months. [ABSTRACT FROM AUTHOR]
- Subjects :
- *YIELD curve (Finance)
*COINCIDENCE
*RECESSIONS
*STATISTICAL power analysis
Subjects
Details
- Language :
- English
- ISSN :
- 03610926
- Volume :
- 53
- Issue :
- 16
- Database :
- Academic Search Index
- Journal :
- Communications in Statistics: Theory & Methods
- Publication Type :
- Academic Journal
- Accession number :
- 178089446
- Full Text :
- https://doi.org/10.1080/03610926.2023.2232908