What is a recession?: a reprise

Abstract

This paper draws its title from a paper written over 35 years ago by Geoffrey H. Moore (1967). Why the need for a reprise? First, there would appear currently to be somewhat diverging views as to what properly constitutes a recession. Second, largely as a result of this, in many countries other than the US, there does not exist a single, widely accepted business cycle chronology for the country in question. This paper will argue that, in addition to output, there are other important aspects to aggregate economic activity that need to be taken into account in determining the business cycle, viz., income, sales and employment. As such, our perspective would seem to be at odds with the apparent position taken by some other recent commentators on this issue who argue that GDP is all that is needed to represent a country's business cycle. We will also argue against using the currently popular 'two negative quarterly growth rate' rule in dating the onset of a recession.