In studies of the predictability of GDP using the term structure by Harvey (1988),an upward sloping yield curve suggests future economic growth.

Question

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Harvey (1988)suggests the yield curve slope is a useful leading indicator of future economic growth,and finds that it is more accurate than either the share market or prior values of GDP.Harvey shows that increases in GDP are expected where the yield curve is upward sloping,while decreases in GDP are expected where the yield curve is downward sloping.

In Studies of the Predictability of GDP Using the Term