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The ability to predict business cycle activity is an invaluable skill for governments and policy makers alike, especially before an economy enters a downturn. We analyse causality relationships between key leading economic indicators and economic growth for three countries from 1970 to 2010. We find that while many indicators do not help explain current movements in GDP growth, lags of these indicators do. In addition, the direction of the change and the size of the change in the lagged economic indicators are very important in many cases. This is particularly true for housing indicators.

A major issue in financial economics is the behaviour of stock returns over long as opposed to short horizons. This paper looks at the relationship between continuously compounded nominal returns and inflation over both short and long horizons. Using over two centuries of annual data for Ireland, this paper finds support for the Generalized Fisher Hypothesis; namely that real stock returns are independent of expected inflation over the long run, and a positive relationship between ex post long-horizon nominal stock returns and inflation.