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Trading Business-Cycle Depth for Duration using an economy-specific characteristic

Author

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  • Ossama Mikhail

    (Dept. of Economics - College of Business Administration - University of Central Florida)

Abstract

Regarding the trade-off between the depth and the duration of recessions, there exists a mounting empirical evidence of the idiosyncratic and non-synchronized behavior of the business cycle over time within and across countries. To account for the trade-off, a model is presented wherein an economy-specific parameter does control the magnitude, severity and persistence of the business cycle without the need to add an asymmetric functional form [that captures the propagation mechanism] to the model. The model results show that as much as half of a percentage point of GDP in depth and a relative difference of three years duration can be attributed to this parameter. The model implies a two-dimensional depth-duration space wherein we place the [average] depth-duration expansion and contraction for the U.S.

Suggested Citation

  • Ossama Mikhail, 2006. "Trading Business-Cycle Depth for Duration using an economy-specific characteristic," Economics Bulletin, AccessEcon, vol. 5(7), pages 1-12.
    • Handle: RePEc:ebl:ecbull:eb-06e30002
    as

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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology

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