The Universal Shape of Economic Recession and Recovery after a Shock
We show that a simple and intuitive three-parameter equation fits remarkably well the evolution of the gross domestic product (GDP) in current and constant dollars of many countries during the times of recession and recovery. We then argue that it can be used to detect shocks and discuss its predictive power. Finally, a two-sector theoretical model of recession and recovery illustrates how the severity and length of recession depends on the dynamics of transfer rate between the growing and failing parts of the economy.
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| Date of creation: | 2009 |
| Handle: | RePEc:zbw:ifwedp:7485 |
| Contact details of provider: | Postal: Kiellinie 66, D-24105 Kiel Phone: +49 431 8814-1 Fax: +49 431 8814528 Web page: http://www.economics-ejournal.org/ Email: More information through EDIRC
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