Abstract
If economic growth and business cycles were completely independent of each other, then changes in the growth rate would be unrelated to dates of business cycle turning points (apart from pure coincidence). That is a testable implication, and we study the connection between business cycles and economic growth by comparing dates of business cycle turning points with dates of estimated trend breaks using quarterly real GDP for 16 OECD countries. Business cycle turning points are identified using a computer algorithm and trend breaks are estimated using a general intervention model. We find that more than 82% of the estimated trend breaks occur near a turning point. We find evidence of deterministic shifting and/or segmented time trends for all 16 OECD countries. We conclude from this that we cannot reject that there might be quantitatively important contemporaneous connections between business cycles and economic growth.
Published Version
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call