The duration of acceleration cycle downturns: duration dependence, international dynamics and synchronisation

Abstract

This paper analyses the factors that affect the duration of economic downturns using data for growth (acceleration) cycles for 13 industrialised countries over the period 1950–2018. Our findings show that downturn periods die of old age. We also find that when trading partners are in a downturn, the duration of a country’s downturn is likely to be shorter, a likely outcome of common stabilisation mechanisms or terms of trade changes. Additionally, more open economies are found to experience shorter downturn periods and European Union countries show a higher level of synchronisation than the others. Lastly, trade linkages are found to intensify acceleration cycle synchronisation.

Determinants of the Duration of Economic Recoveries: The Role of ’Too Much Finance’

“…For seminal applications to the study of unemployment length seeKiefer (1984Kiefer ( , 1988 3. Among other applications, it has been used to analyze the duration of stock markets' bull and bear cycles(Lunde and Timmermann, 2004), duration of expansions and recessions(Sichel, 1991;Zuehlke, 2003;Daviq, 2007;Castro, 2010Castro, , 2013, local government tenure in office(Castro and Martins, 2013), house price upturns and downturns(Bracke, 2013), length of fiscal consolidation programs(Agnello et al, 2013), booms and busts in the housing market(Agnello et al, 2015(Agnello et al, , 2017, periods of financial markets' shutdown and re-access(Agnello et al, 2018), sovereign ratings cycle phases(Agnello et al, 2021), duration of credit booms(Castro and Martins, 2013), length of economic downturns(Koutsoumanis and Castro, 2022), and duration of financial crises(Nguyen et al, 2022b) 4. See, for example,,Diebold et al ( , 1993,Sichel (1991), Abderrezak (1998),Zuehlke (2003),Daviq (2007),Castro (2010Castro ( , 2013,Bondt and Vermeulen (2021), andKoutsoumanis and Castro (2022), among others.…”