BUSINESS CYCLE ASYMMETRY: A DEEPER LOOK

Authors

  • DANIEL E. SICHEL

    Search for more papers by this author
    • *Board of Governors of the Federal Reserve System, Washington, DC, 20551. I would like to thank Anne Case, Neil Ericsson, David Lebow, Joe Mattey, Salih Neftci, John Roberts, Christina Romer, David Romer, David Stockton, Kenneth West, David Wilcox, two anonymous referees, and the editor for useful discussions and comments. I owe special thanks to Stephen Goldfeld. The views expressed are those of the author and do not necessarily represent those of the Board of Governors or the staff of the Federal Reserve System.


Abstract

This paper distinguishes two types of asymmetry in business cycles: deepness and steepness. Deepness is defined as the characteristic that troughs are further below trend than peaks are above. Most previous research has focused exclusively on steepness, which refers to cycles in which contractions are steeper than expansions. A test for deepness is proposed and applied to U.S. post-war quarterly unemployment, real GNP, and industrial production. Evidence of deepness is found for unemployment and industrial production, while the evidence for real GNP is weaker. Previous evidence of steepness in unemployment is confirmed.

Ancillary