The Universal Shape of Economic Recession and Recovery after a Shock

Damien Challet, Sorin Solomon and Gur Yaari

No 2009-6, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: We show that a simple and intuitive three-parameter equation fits remarkably well the evolution of the gross domestic product (GDP) in current and constant dollars of many countries during the times of recession and recovery. We then argue that it can be used to detect shocks and discuss its predictive power. Finally, a two-sector theoretical model of recession and recovery illustrates how the severity and length of recession depends on the dynamics of transfer rate between the growing and failing parts of the economy.

Keywords: Economic growth; transition economies; GDP; modelling; prediction; optimal policy (search for similar items in EconPapers)
JEL-codes: C32 O23 O41 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-cba and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Journal Article: The universal shape of economic recession and recovery after a shock (2009)
Working Paper: The universal shape of economic recession and recovery after a shock (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:7485

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