Investigating business cycle asymmetry for the G7 countries: evidence from over a century of data

Paresh Kumar Narayan, Stephan Popp

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9 Citations (Scopus)

Abstract

In this paper we test for asymmetric behaviour of business cycles for the G7 countries, using the entropy-based test for asymmetry suggested by Racine and Maasoumi [Racine, J.S., & Maasoumi, E. (in press-a). A versatile and robust metric entropy test of time-reversibility, and other hypotheses, Journal of Econometrics; Racine, J.S., & Maasoumi, E. (in press-b). A robust entropy based test for asymmetry. Econometric Reviews.]. We find overwhelming evidence of symmetry. In only 14% of the cases, we find some evidence of asymmetric behaviour of GDP and per capita GDP. More importantly, the period marked by the flexible exchange rate regime, over which much of the empirical work for the G7 countries has been conducted, evidence suggests that the two GDP series are symmetric.

Original languageEnglish
Pages (from-to)583-591
Number of pages9
JournalInternational Review of Economics and Finance
Volume18
Issue number4
DOIs
Publication statusPublished - Oct 2009
Externally publishedYes

Keywords

  • Entropy-based test for asymmetry
  • GDP

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