A working paper published by the Bank of Spain presents a new empirical framework for spotting recessions in major regions of the world economy “in real time”.

In Real-time weakness of the global economy: a first assessment of the coronavirus crisis, Danilo Leiva-Leon, Gabriel Perez-Quiros and Eyno Rots explain how their model constructs a “global weakness index”.

They say their paper relies on non-linear factor models “designed to infer recessionary episodes of heterogeneous deepness” as