The Odds of a Depression are 20% Based on a Sweeping Historical Study

By on March 8, 2009

Robert J. Barro, professor of economics at Harvard and a fellow at Stanford University’s Hoover Institution, recently published the results of a long-term study of economic downturns throughout the world. Mr. Barro studied 251 stock market crashes and 97 depressions which have occurred in 34 countries. From this information he arrived at the estimate that there is a 20% chance that the current stock market crash will result in a depression.


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