6 See Donald Kohn and Brian Sack, Monetary Policy during the Financial Crisis, preliminary discussion draft  presented at the Hutchins Center on Fiscal and Monetary Policy at Brookings and Yale School of Management Program on Financial Stability event, Responding to the Global Financial Crisis: What We Did and Why We Did It, Washington, D.C., September 11–12, 2018. 7 Possible sources to which this lament has been attributed are catalogued here, although its actual provenance  is not known. 8 As part of our analysis of what went wrong in our forecasting before the Great Recession, researchers at the  Federal Reserve and European Central Bank jointly looked at various methods of more directly including highfrequency fluctuations in our forecasting models. The results from this research are reported in Luci Alessi, Eric Ghysels, Luca Onorante, Richard Peach, and Simon Potter, Central Bank Macroeconomic Forecasting during the Global Financial Crisis: The European Central Bank and Federal Reserve Bank of New York Experiences, Federal Reserve Bank of New York Staff Reports, number 680, July 2014. 9 See survey questions and results to the Survey of Primary Dealers and Survey of Markets Participants, Federal  Reserve Bank of New York. 10 Of course, the NBER didn’t actually declare the start of the recession until late November 2008, nearly a year  after it officially began. 11 Estrella and Mishkin’s original paper, updates, related research, and current recession probabilities implied by  the term spread are available on the New York Fed’s Research website.
This brings me to the fundamental question of why a particular pattern of asset price moves tends to precede recessions. Let's suppose for now we have estimated and evaluated the best possible model to incorporate the statistical implications of these asset price patterns on recession probabilities and of the depth of a recession based on the available data. Is the model showing a causal relationship or is it just a predictive relationship with a different causal factor driving both asset prices and the real economy? And if the latter, what are the causal factors? This is a different question than the one we were debating in our internal discussions in 19992000 and 2006-2007. We spent much of that time arguing about whether structural change, particularly lower compensation for interest rate risk, meant that asset price indicators were less relevant than before. An alternative approach would be to ask, if the probability of recession is elevated, what might be causing this phenomenon? And then ask the complementary question: If the probability of recession is unusually low, what might be causing that phenomenon? In this latter case, given the asymmetry in loss between elevated recession probabilities and elevated 4/6  BIS central bankers' speeches  expansion probabilities, a very helpful follow-up question would have been whether beliefs in central banks contributing to the economic stability of the Great Moderation had made us too complacent about recession risks. Tetlock emphasizes the importance of post-mortems once outcomes are known.