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The Effects of Business Cycles on Growth – Time Series Evidence for the G7-countries Using Survey-based Measures of the Business Cycle

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  • Jörg Döpke

Abstract

The paper analyses whether business cycle fluctuations affect long-run growth. This hypothesis is tested using quarterly time series for the G7-countries. A vector-autoregressive model containing total factor productivity and a survey-based direct measure of the business cycle is estimated. In this vector-autoregression, technology and business cycle shocks are identified based on the assumption that productivity-improving measures need some time and, thus, there is no contemporaneous response of productivity to a business cycle innovation. The results suggest that positive business cycles shocks have a small negative impact on long-run productivity. However, the results appear to be not robust against changes in the empirical model.(JEL E32, O41)

Suggested Citation

  • Jörg Döpke, 2004. "The Effects of Business Cycles on Growth – Time Series Evidence for the G7-countries Using Survey-based Measures of the Business Cycle," CESifo Economic Studies, CESifo Group, vol. 50(2), pages 333-349.
    • Handle: RePEc:oup:cesifo:v:50:y:2004:i:2:p:333-349.
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    File URL: http://hdl.handle.net/10.1093/cesifo/50.2.333
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    Citations

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    Cited by:

    1. Christoph Priesmeier & Nikolai Stähler, 2011. "Long Dark Shadows Or Innovative Spirits? The Effects Of (Smoothing) Business Cycles On Economic Growth: A Survey Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 25(5), pages 898-912, December.
    2. Mallick, Debdulal, 2015. "Elusive Relationship between Business-cycle Volatility and Long-run Growth," MPRA Paper 64502, University Library of Munich, Germany.
    3. Ghulam MOHEY-UD-DIN* & Muhammad Wasif SIDDIQI**, 2017. "GDP FLUCTUATIONS AND LONG-RUN ECONOMIC GROWTH: A Study of Selected South Asian Countries," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 27(1), pages 41-66.
    4. Moyen, Stéphane & Stähler, Nikolai, 2009. "Unemployment insurance and the business cycle: prolong benefit entitlements in bad times?," Discussion Paper Series 1: Economic Studies 2009,30, Deutsche Bundesbank.
    5. Mallick, Debdulal, 2017. "The Growth-Volatility Relationship: What Does Volatility Decomposition Tell?," MPRA Paper 79397, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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