Friedman’s Plucking Model: New International Evidence From Maddison Project Data

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See all articles by Jonathan Hartley

Jonathan Hartley

Harvard University, Harvard Kennedy School (HKS), Students

Date Written: November 19, 2020

Abstract

Milton Friedman’s plucking model of business cycles hypothesizes that deeper recessions forecast larger booms while stronger booms do not necessarily forecast deeper recessions. While most previous past empirical work is limited to post-war data in the US, this paper tests the plucking model using Maddison Project growth data for 169 countries across several centuries. We find that the plucking principle is broadly evident across time and countries, particularly in East Asia, Europe and North America while to a lesser extent elsewhere.

Keywords: Markov Chains, Recessions, International Business Cycles

JEL Classification: E17, E32, E37, F43, F44

Suggested Citation

Hartley, Jonathan, Friedman’s Plucking Model: New International Evidence From Maddison Project Data (November 19, 2020). Available at SSRN: https://ssrn.com/abstract=

Jonathan Hartley (Contact Author)

Harvard University, Harvard Kennedy School (HKS), Students ( email )

Cambridge, MA
United States

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