Nonlinear Business Cycle Dynamics: Cross-Country Evidence on the Persistence of Aggregate Shocks
Economic Inquiry, Volume XXXV, Number 3, July 1997
Posted: 25 Mar 1998
We look for asymmetries in the dynamics of real GDP growth for the G7 countries, using a model by Beaudry and Koop that allows the depth of a recession to influence the rate of growth of output. We find evidence supporting these nonlinearities in four countries, including the United States, but we do not find evidence that the asymmetries are common even among the four countries exhibiting asymmetric behavior. A modification of the model to distinguish between the recession and recovery phases of a business cycle does not change this general finding. The asymmetries discovered by Beaudry and Koop do not appear to be common among the G7 nations.
JEL Classification: E32
Suggested Citation: Suggested Citation