Recession From Declination of Economic Activities Dictated by Conditional Probabilities

Abstract

From a probabilistic model, this paper demonstrates that recession might be in essence the main event constituted by the conjunction of financial crisis, adverse supply shock, natural causes, serious declination of gross domestic product, among others factors, all of them entangled each other but dictated by the theorem of Bayes. Thus, this paper proposes the idea that recession from the mathematical point of view is the fall of spending as consequence of convoluted probabilistic distribution function through kernel functions that might be mathematically interpreted as the recoil on (i) production, (ii) consumption, (iii) investment, and (iv) employment. In this manner, recession might be understood as the Bayesian scenario by which variables are conditioned each other.