Are Business Cycles Asymmetric? A Correction

Abstract

Neftci (1984) proposed a nonparametric test procedure for determining whether business cycles are asymmetric in the sense that contractions are steeper than expansions. He found evidence of this type of asymmetry in postwar quarterly U.S. unemployment variables.' This comment identifies a probable error in Neftci's empirical work that reverses the significance of his results for the unemployment rate, and it suggests that this test may have low power and be sensitive to measurement error.