The Yield Curve as a Leading Indicator: Some Practical Issues.

This article presents an analysis on the use of yield curve as an indicator of future economic activity. Yield curve is used as a predictor of recessions. Factors that influence yield curve include monetary policy and changes in investor expectations. There are several models or methods that can be maximize the use of yield curve to predict recessions, such as the probability model and measuring the spread between long-term and short-term rates.