Comparing the shape of recoveries: France, the UK and the US

Frédérique Bec, Othman Bouabdallah and Laurent Ferrara

Economic Modelling, 2015, vol. 44, issue C, 327-334

Abstract: Progresses in fiscal consolidation programs are often expressed in cyclically-adjusted terms, meaning that business cycles have to be accurately estimated. In this paper, we put forward a parametric framework enabling to assess business cycles, especially at the end of recession periods by accounting for bounce-back effects. We explore the various shapes that the recoveries may exhibit within an extended Markov-Switching model as proposed by Kim, Morley and Piger (2005) and extend the methodology by proposing i) a more flexible bounce-back model, ii) explicit tests to select the appropriate bounce-back function, if any, and iii) a suitable measure of the permanent impact of recessions. By applying this approach to post-WWII quarterly growth rates of US, UK and French real GDPs, we show that the shape of recoveries is country-specific.

Keywords: Business cycles; Markov-switching models; Bounce-back effects (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:44:y:2015:i:c:p:327-334

DOI: 10.1016/j.econmod.2014.04.008

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