Do the phases of the business cycle die of old age?

Di Venuto, Nicholas and Layton, Allan P. (2005) Do the phases of the business cycle die of old age? Australian Economic Papers, 44 (3). pp. 290-305. ISSN 0004-900X

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The paper re-examines the issue of duration dependence in the Australian classical and growth business cycles in light of the somewhat surprising results obtained recently by Cashin and Ouliaris (2004). In so doing the authors use the multinomial logit regime switching modelling approach of Layton and Smith (2003). The paper also represents an extension of the earlier work on the issue undertaken by
Bodman (1998); the key extensions being that the issue is framed within an explicit established business cycle chronology, a leading index is also included within the analysis, and the growth cycle, in addition to the classical cycle, is considered. Strong evidence of duration dependence is found for periods of recession within the classical cycle and for both phases of the growth cycle. Moderate evidence of duration dependency is also found for periods of classical cycle expansion. However, the evidence in this regard is significantly reduced once movements in the leading index are included in the analysis with its movements exhibiting strong power in predicting the termination of classical business cycle expansions. For growth cycles, duration dependence symmetry is found across both phases of the cycle.

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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Permanent restricted access to Published version due to publisher copyright restrictions. The definitive version is available at the URL above at
Faculty / Department / School: Historic - Faculty of Business - No Department
Date Deposited: 11 Oct 2007 01:16
Last Modified: 02 Jul 2013 22:48
Uncontrolled Keywords: business cycles; recession; growth; boom
Fields of Research : 14 Economics > 1403 Econometrics > 140302 Econometric and Statistical Methods
14 Economics > 1403 Econometrics > 140303 Economic Models and Forecasting
14 Economics > 1403 Econometrics > 140305 Time-Series Analysis
Socio-Economic Objective: E Expanding Knowledge > 97 Expanding Knowledge > 970114 Expanding Knowledge in Economics
Identification Number or DOI: 10.1111/j.1467-8454.2005.00266.x

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