On the duration of growth cycles: An international study

Abstract

Conventionally, macroeconomic instability has been analyzed in terms of expansions and contractions in the level of aggregate economic activity (business cycles). Increasingly, cyclical instability is viewed in terms of advances and retardation in the rate of growth (growth cycles) as well. In this study, parametric hazard models are used to examine the duration dependence in growth cycles of eleven market-oriented economies. Positive duration dependence is depicted in postwar cycles of these countries. However, no memory in growth-cycle phases is detected. All eleven individual growth-cycle experiences reveal no significant indication that shorter contractions follow longer expansions and vice-versa. The statistical evidence also indicates that while international whole growth-cycles tend to vary in duration from those in the U. S., cyclical phase durations tend to be comparable to those experienced by the American economy.