COWLES FOUNDATION FOR RESEARCH IN ECONOMICS
AT YALE UNIVERSITY

Post Office Box 208281
New Haven, CT 06520-8281

COWLES FOUNDATION DISCUSSION PAPER NO. 808

"Forecasting the Depression: Harvard Versus Yale"

Ray C. Fair, Matthew D. Shapiro and Kathryn M. Dominguez

November 1986

Was the Depression forecastable? After the Crash, how long did it take contemporary economic forecasters to realize how severe the downturn was going to be? How long should it have taken them to come to this realization? These questions are addressed by studying the predictions of the Harvard Economic Service and Yale’s Irving Fisher during 1929 and the early 1930’s. The data assembled by the Harvard and Yale forecasters are subjected to modern statistical analysis to learn whether their verbal pronouncements were consistent with the data. We find that both the Harvard and Yale forecasters were systematically too optimistic, yet nothing in the data suggests that the optimum was unwarranted.

JEL Classification: 042, 031

Keywords: Depression, forecasting