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The Australian Business Cycle: Joe Palooka or Dead Cat Bounce?

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  • Bodman, Philip M
  • Crosby, Mark

Abstract

We address the question of whether asymmetry in the business cycle and asymmetry in the persistence of negative versus positive shocks characterises Australian output growth. Using nonlinear time series models we provide some evidence consistent with the idea that Australian output growth is characterised by three distinct phases: contractions, high-growth recovery periods and "normal" or moderate growth periods. This implies that Australian output fluctuations have a significant transitory component and is supportive of the "output-gaps" view and "plucking" model view of economic fluctuations. In contrast to recent evidence for the US and Canada however, we find that Australian GDP growth does not exhibit important asymmetries in the responses of output growth to positive and negative shocks. Copyright 2002 by Blackwell Publishers Ltd/University of Adelaide and Flinders University of South Australia

Suggested Citation

  • Bodman, Philip M & Crosby, Mark, 2002. "The Australian Business Cycle: Joe Palooka or Dead Cat Bounce?," Australian Economic Papers, Wiley Blackwell, vol. 41(2), pages 191-207, June.
  • Handle: RePEc:bla:ausecp:v:41:y:2002:i:2:p:191-207
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    Cited by:

    1. Yeyati, Eduardo Levy & Panizza, Ugo, 2011. "The elusive costs of sovereign defaults," Journal of Development Economics, Elsevier, vol. 94(1), pages 95-105, January.
    2. Ólan T. Henry & Nilss Olekalns, 2002. "The Effect of Recessions on the Relationship between Output Variability and Growth," Southern Economic Journal, Southern Economic Association, vol. 68(3), pages 683-692, January.
    3. Nilss Olekalns, 2001. "Cyclical asymmetries in Australian macroeconomic data," Applied Economics Letters, Taylor & Francis Journals, vol. 8(3), pages 145-148.
    4. Taylor, Andrew & Shepherd, David & Duncan, Stephen, 2005. "The structure of the Australian growth process: A Bayesian model selection view of Markov switching," Economic Modelling, Elsevier, vol. 22(4), pages 628-645, July.
    5. Levy Yeyati, Eduardo, 2008. "The cost of reserves," Economics Letters, Elsevier, vol. 100(1), pages 39-42, July.
    6. Narayan, Paresh Kumar, 2008. "An investigation of the behaviour of Australia's business cycle," Economic Modelling, Elsevier, vol. 25(4), pages 676-683, July.
    7. Phil Bodman, "undated". "Are the Effects of Monetary Policy Asymmetric in Australia?," MRG Discussion Paper Series 0406, School of Economics, University of Queensland, Australia.
    8. Philip Bodman, 2009. "Output volatility in Australia," Applied Economics, Taylor & Francis Journals, vol. 41(24), pages 3117-3129.
    9. Dr Alicia Rambaldi & Bortolussi, 2004. "Interactions of Source State and Market Price Trends for Cattle of Korean, Japanese and USA Market Specifications," Discussion Papers Series 334, School of Economics, University of Queensland, Australia.

    More about this item

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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