Business cycle dating

See Data Sources The financial press often states the definition of a recession as two consecutive quarters of decline in real GDP. How does that relate to your recession dating procedure? As an example, the Committee has identified the period from the first quarter in to the third quarter in as a recession, despite the fact that real GDP was growing in some quarters during that episode and that real GDP was higher at the end of the recession than at the beginning.

As another example, the Committee did not declare a recession for or , even though the data at the time appeared to show a decline in economic activity though not for two quarters.

Subsequent data revisions have erased these declines. First, we do not identify economic activity solely with real GDP, but use a range of indicators, notably employment. Second, we consider the depth of the decline in economic activity. The following period is an expansion. How long does the Committee expect the recession to last? The Committee does not forecast. The President and the Research Director are ex officio members of the Committee. Does the Committee date recessions for individual countries in the euro area?

No, the sole objective of the Committee is to date recessions for the euro area as a whole. Why does the Committee not date recessions for individual countries? Is it possible that the EU area is in a recession while some of the individual countries are not? The Committee wants to make sure that its characterization of Euro-area economic activity which is its sole objective is not affected by rising heterogeneity in the Euro-area. Adopting a dating criterion that refers solely to aggregate Euro-area economic activity achieves this objective most transparently.

Note that since October the Committee has dropped its requirement that peaks or troughs mark turning points in economic activity in most countries of the euro area. It is thus possible that the EU-area is in a recession while some of the individual countries are not, and that the business cycle dates differ for the Euro-area and for individual countries.

For instance, Q3 is a peak in the Euro-area as a whole, but not for Germany. The Committee wants to ensure that its characterization of Euro-area economic activity which is its sole objective is not affected by rising heterogeneity in the Euro-area.

The rationale for this definitional change is explained in detail in a methodological note. It is thus possible that the euro area is in a recession while some of the individual countries are not, and that the business cycle dates differ for the Euro-area and for individual countries.

When does the Committee meet? When does it release its findings? The Committee meets when it feels that data developments warrant examining whether there has been a turnaround in economic activity.

Since October , the Committee releases its findings after each meeting — whether or not it has decided to date a trough or a peak. Previously, it did so only after meetings that did date a turnaround.

The rationale for this change is that the Committee feels that the decision not to date is as informative as a decision to date. See, for instance, the October or June findings of the Committee.


business cycle more in line with reality led to emergence of the concept of growth cycle (Mintz, ). The growth cycle is defined as the ups and downs in the deviations of the. The business cycle has four distinct phases, with the example of the U.S. in a mid-cycle expansion in mid have generally experienced significant differentiation among asset class performance relative to the rest of the cycle, the NBER’s dating scheme has historically offered solid opportunities for active asset allocation. However.

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