On Detrending and Cyclical Asymmetry

Martin Sola and Zacharias Psaradakis

Department of Economics Working Papers from Universidad Torcuato Di Tella

Abstract: This paper considers the issue of testing for symmetry of the business cycle. It is demonstrated that findings of symmetry should be interpreted with caution since tests tend to have low power to detect asymmetries when applied to data that have been filtered to isolate their stationary business-cycle component. This implies that asymmetries are likely to be detected in practice only when they are particularly prominent. An empirical application examines the properties of the cyclical component of real GDP from the G7 countries.

Pages: 21 pages
Date: 2002-04
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Journal Article: On detrending and cyclical asymmetry (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:udt:wpecon:020

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