In the Bachelor thesis Indicators of economic crises on financial
markets, I analyzed the response of various indicators to the economic cycle. The objective of the paper was to analyze the behaviour of selected indicators during the crisis in order to understand the consequences of the crisis on financial markets and, above all, possible signals that can be received on the financial markets about a possible upcoming crisis. The aim was to answer whether we can predict from the indicator behaviour of the last decades what will happen in the future and whether the selected indicators behave in accordance with the economic cycle. The method of research was literature analysis and empirical analysis of existing databases with the programming language R. The International Monetary Fund, The European Central Bank, Eurostat, Bank of Japan and The World Bank were selected as the main data sources. The data were selected from the United States, the Euro area and Japan.
The results show that predicting a recession based on the yield curve is relatively reliable. However, in the last crisis it was not the yield curve that predicted the economic downturn, since the emergencies, such as the global health crisis, did not address the behaviour of financial indicators in the past years.
I have concluded that the yield curve can be used as an indicator of crises, but it is necessary to observe several cycles of the economy, as we do not have enough data so far to observe more accurate patterns.
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