US Recession Analysis Based on Ordinary Least Squares Regression

Abstract

The United States is the first developed economy that rebounded from the 2008 global financial. Theoretically, US economic cycle is influenced by several factors, this paper mainly focuses on the linkage of the US economic growth and The correlation between the unemployment rate and the U.S. federal funds rate. Between times with rising economic activity, known as expansions. Whereas, the periods of diminishing economic activity is known as recessions. The economic climate constantly shifts throughout time. Firstly, the rate of employment and the rate of federal funding are cointegrated. The findings of a regression analysis demonstrate that there is a negative concurrent correlation between the federal funds rate and unemployment rate. Secondly, in order to verify the linkage, through an in-depth review of the data, several interlinked and external factors behind the pattern of such correlation related to the variation on economic growth also need to be elaborated.