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A feature of U.S. postwar business cycle experience that is by now widely documented is the tendency of the spread between the respective interest rates on commercial paper and Treasury bills to widen shortly before the onset of recessions. By contrast, the paper-bill spread did not anticipate the 1990-1991 recession. Empirical work presented in this paper supports two (not mutually exclusive) explanations for this departure from past experience. First, at least part of the paper-bill spread's predictive content with respect to business cycle fluctuations stems from its role as an indicator of monetary policy, but the 1990-1991 recession was unusual in postwar U.S. experience in not being immediately precipitated by tight monetary policy. Second, movements of the spread during the few years just prior to the 1990-1991 recession were strongly influenced by changes in the relative quantities of commercial paper, bank CDs, and Treasury bills that occurred for reasons unrelated to the business cycle. This latter finding in particular sheds light on the important role of imperfect substitutability of different short-term debt instruments in investors' portfolios, and highlights the burdens associated with using relative interest rate relationships as business cycle indicators. [ABSTRACT FROM AUTHOR]

This paper uses panel data for Canada from 1976 to 2018, across 10 provinces, to reassess the relationship between mortality rates and economic fluctuations. The key contribution of our paper lies in examining the extent to which this relationship is driven by the employment rate (extensive margin) versus average hours worked (intensive margin). We find evidence of procyclical mortality for females at the aggregate level; aggregate male mortality remains largely unaffected by economic fluctuations. Our findings also reveal temporal heterogeneity, as the extensive margin becomes the driving force for female mortality rates during the more recent period (1990 onwards). These findings remain robust when accounting for personal income and pollution. Finally, we find some support for a procyclical relationship for individuals in the working age groups, while mortality exhibits a countercyclical pattern for children (age 0 to 14) and the elderly (age 65 and above). [ABSTRACT FROM AUTHOR]

This article charts the successes and failures of urban regeneration policies in the UK. Aspects of both continuity and change in the direction and implementation of urban policy are explored. It is argued that while New Labour's approach since 1997 has been distinctive and, in some respects, innovative, especially in relation to community engagement, it has continued to adopt a flawed conceptualisation of the urban problem which has led to a limited policy response. That legacy is likely to have a continuing influence on policy. Looking ahead, new challenges need to be faced, notably economic recession and climate change. [ABSTRACT FROM AUTHOR]

As a rule, the economy regularly undergoes various phases, from a recession up to expansion. This paper is focused on models predicting corporate financial distress. Its aim is to analyze impact of individual phases of the economic cycle on final scores of the prediction models. The prediction models may be used for quick, inexpensive evaluation of a corporate financial situation leading to business risk mitigation. The research conducted is drawn from accounting data extracted from the prepaid corporate database, Albertina. The carried-out analysis also highlights and examines industry specifics; therefore, three industry branches are under examination. Enterprises falling under Manufacture of metal products, Machinery, and Construction are categorized into insolvent and healthy entities. In this study, 18 models are selected and then applied to the business data describing recession and expansion. The final scores achieved are summarized by the main descriptive statistics, such as mean, median, and trimmed mean, followed by the absolute difference comparing expansion and recession. The results confirm the expectations, assuming that final scores with higher values describe better corporate financial standing during the expansion phase. Similar results are achieved for both healthy and insolvent enterprises. The paper highlights exceptions and offers possible interpretations. As a conclusion, it is recommended that users need to respect the current phase of the economic cycle when interpreting particular results of the prediction models. [ABSTRACT FROM AUTHOR]

This paper studies the impact of time-varying idiosyncratic risk at the establishment level on unemployment fluctuations over 1972-2009. I build a tractable directed search model with firm dynamics and time-varying idiosyncratic volatility. The model allows for endogenous separations, entry and exit, and job-to-job transitions. I show that the model can replicate salient features of the microeconomic behavior of firms and that the introduction of volatility improves the fit of the model for standard business cycle moments. In a series of counterfactual experiments, I show that time-varying risk is important to account for the magnitude of fluctuations in aggregate unemployment for past U.S. recessions. Though the model can account for about 40% of the total increase in unemployment for the 2007-2009 recession, uncertainty alone is not sufficient to explain the magnitude and persistence of unemployment during that episode. [ABSTRACT FROM AUTHOR]

Some financial disruptions that started in California, U.S., in March 2023, resulting in the closure of several medium-size U.S. banks, shed new light on the role of liquidity in business cycle dynamics. In the normal path of the business cycle, liquidity and output mutually interact. Small shocks generally lead to mean reversion through market forces, as a low degree of liquidity dissipation does not significantly disrupt the economic dynamics. However, larger shocks and greater liquidity dissipation arising from runs on financial institutions and contagion effects can trigger tipping points, financial disruptions, and economic downturns. The latter poses severe challenges for Central Banks, which during normal times, usually maintain a hands-off approach with soft regulation and monitoring, allowing the market to operate. However, in severe times of liquidity dissipation, they must swiftly restore liquidity flows and rebuild trust in stability to avoid further disruptions and meltdowns. In this paper, we present a nonlinear model of the liquidity–macro interaction and econometrically explore those types of dynamic features with data from the U.S. economy. Guided by a theoretical model, we use nonlinear econometric methods of a Smooth Transition Regression type to study those features, which provide and suggest further regulation and monitoring guidelines and institutional enforcement of rules. [ABSTRACT FROM AUTHOR]

Do new products launched during a recession perform better? Does the severity of the recession matter? Are products more successful when launched earlier or later in a recession? These are all questions of managerial importance that as yet remain unanswered in the extant marketing literature. The authors analyze two datasets: 1) 8,981 product launches in 20 United Kingdom fast-moving consumer goods categories over 18 years and 2) 1,071 product launches in the United States automotive market over 63 years. The results reveal products launched (a) during a recession and (b) later rather than earlier in the recession survive longer, while more severe recessions are associated with shorter survival. The same findings emerge for the dependent variables of sales and market share. This paper thus enriches marketing theory on recessions by conceptualizing and quantifying timing effects on new product launch success. For managers, the results demonstrate the benefits of countercyclical launching of new products during recessions and of marketing proactively in such economic conditions. [ABSTRACT FROM AUTHOR]

This paper establishes a new fact about the compositional changes in the pool of unemployed over the US business cycle. Using microdata from the Current Population Survey for the years 1962-2012, it documents that in recessions the pool of unemployed shifts toward workers with high wages in their previous job and that these shifts are driven by the high cyclicality of separations for high-wage workers. The paper finds that standard theories of wage setting and unemployment have difficulty in explaining these patterns and evaluates a number of alternative theories that do better in accounting for the new fact. (JEL E24, E32, J31, J63, J64) [ABSTRACT FROM AUTHOR]

Copyright of Cimexus is the property of Revista CIMEXUS and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The main purpose of this paper is to build a family of tutorial Goodwinian (essentially Marxist) models of capital accumulation through industrial cycles that are less complicated than the author's models of the extended capitalist reproduction in the USA already published. The subordinate purpose is to advance refinement of these models from the standard "neoclassical" assumptions that distort the generic structures determining perpetual disequilibrium in the reproduction of the aggregate social capital. The ascending from abstract to concrete applies the notion of twofold nature of capitalist production as creation of use value and labour value (prioritizing surplus value). This approach reveals substantial facets of endogenous increasing returns and technological progress induced by capitalist production relations. A three-dimensional Goodwinian model L-1, containing the greed feedback loops, reflects destabilizing cooperation and stabilizing competition of investors. Monopoly capital implements proportional and derivative control over the capital accumulation rate. The growth rate of output per worker directly depends on the growth rates of capital intensity and employment ratio in a technical progress function, whereas the capital-output ratio is constant. Oscillations imitating growth cycles are endogenous. A recession (mild crisis) is a manifestation of relative and absolute over-accumulation of capital. A knife-edge limit cycle maintains a growth cycle with the Kondratiev duration; a more solid limit cycle with a period of about 7.5 years upholds a business cycle with a recession without reduced net output. These limit cycles result from the subsequent supercritical Andronov–Hopf bifurcations. The transformation of the growth cycle into industrial cycle gives credit to raising status of capital-output ratio from auxiliary in L-1 to the level (phase) variable in four-dimensional L-2. A mechanization (automation) function mirrors induced technical progress. L-2 embraces new 11 intensive feedback loops involving capital-output ratio. Proportional and derivative control over this ratio by monopoly capital is taken into account. Pair of supercritical Andronov–Hopf bifurcations gives birth to two limit cycles. The second is a remote analogue for Kuznets cycle with the period of about 18 years; the first upholds the industrial cycle with period of about 7 years and declining net output in the outright crisis. Besides relative and absolute over-accumulation of capital, the specific positive and negative feedback loops containing capital-output ratio are required for crises in industrial cycles. Long-term enhancement of monopoly profit through lowering a targeted domestic capital accumulation rate and diminishing a targeted output-capital ratio is substantiated analytically and validated by computer simulations. The gained insights highlight caveats for hastily policy recommendations. [ABSTRACT FROM AUTHOR]

In this paper we study an economy with a high degree of financialization in which (non-financial) firms need loans from commercial banks to finance production, service debt, and make long-term investments. Along the business cycle, the economy follows a Minsky base cycle with firms traversing through the various stages of financial fragility, i.e. hedge, speculative and Ponzi finance (cf., Minsky in The financial instability hypothesis: a restatement. Hyman P Minsky archive paper, vol 180, pp 541-552, 1978; Stabilizing an unstable economy. Yale University Press, 2nd edn 2008, McGraw-Hill, New York, 1986; The financial instability hypothesis. Economics working paper archive wp74. The Jerome Levy Economics Institute of Bard College, 1992). In the speculative financial stage cash flows are insufficient to finance the repayment of principle but sufficient for paying interest, so banks are willing to roll-over credits in order to prevent loan defaults. In the Ponzi financial position even interest payments cannot be served, but banks my still be willing to keep firms alive through “extend and pretend” loans, also known as zombie-lending (Caballero et al. in Am Econ Rev 98(5):1943-1977, 2008). This lending behavior may cause credit bubbles with increasing leverage ratios. Empirical evidence suggests that recessions following such leveraging booms are more severe and can be associated to higher economic costs (Jordà et al. in J Money Credit Bank 45(s2):3-28, 2013; Schularick and Taylor in Am Econ Rev 102(2):1029-1061, 2012). We study macroprudential regulations aimed at: (i) the prevention and mitigation of credit bubbles, (ii) ensuring macro-financial stability, and (iii) limiting the ability of banks to create unsustainable debt bubbles. Our results show that limiting the credit growth by using a non-risk-weighted capital ratio has slightly positive effects, while using loan eligibility criteria such as cutting off funding to all financially unsound firms (speculative and Ponzi) has strong positive effects. [ABSTRACT FROM AUTHOR]

The COVID-19 pandemic simultaneously affected most economic sectors and has already caused severe worldwide social and economic damage. In response, authorities introduced social distancing measures, with an adverse impact on economic activity. If policymakers were aware of the existing vulnerabilities, including those derived from the positioning on the business cycle, resilience could have been increased. The aim of this article is to describe various methods of dating business cycles in several Central and Eastern European (C.E.E.) countries, namely Czechia, Hungary, Poland and Romania. Furthermore, a Probit model regarding the probability of a recession is estimated, confirming the adverse effects of the pandemic, in contrast with a brightening outlook given vaccination campaigns and the E.U. recovery package. However, in case of the Romanian economy, an in-sample estimation showed a high probability of negative growth rates even in a pre-pandemic world, due to the high macroeconomic imbalances. [ABSTRACT FROM AUTHOR]

This paper assesses how environmental, social, and governance (ESG) news influence Portuguese stock market volatility depending on the business cycle. Given the lack of an adequate index to capture the effects of ESG media on the Portuguese stock market, a News Sentiment Index is developed. This index, which captures positive and negative ESG news on companies listed in the Portuguese Stock Index (PSI‐20), is then used as an external regressor in symmetric and asymmetric GARCH‐type models employed to model the stock market volatility. Results show that during non‐crisis periods ESG news reduce returns' volatility, and that when considering the period preceding the financial crisis the disclosure content (positive or negative) of the news matter. However, during economic downturns, neither the amount nor the content disclosure of ESG news affect volatility; thus, ESG preoccupations might no longer be paramount. [ABSTRACT FROM AUTHOR]

This paper constructs a new chronology of the business cycle in the United Kingdom from 1700 on an annual basis and from 1920 on a quarterly basis to 2010. The new chronology points to several observations about the business cycle. First, the cycle has significantly increased in duration and amplitude over time. Second, contractions have become less frequent but are as persistent and costly as at other times in history. Third, the typical recession has been tick‐shaped with a short contraction and longer recovery. Finally, the major causes of downturns have been sectoral shocks, financial crises, and wars. [ABSTRACT FROM AUTHOR]

This article presents the authors comments on the paper by Christina Romer and David Romer, What Ends Recessions?, which combines frontier research with an analysis of the role of the U.S. Federal Reserve in stabilizing output. The paper is broad in scope and well written. The discussion of the episodes is a good, quick review of the events, and it is excellent material to be assigned to students. The paper considers several question. First, how do policymakers behave? And second, how do policy actions affect the economy? My main theme of my remarks is that Romer and Romer (RR) could do more with these question than they have done so far. Regarding the first question, there is a large literature, which RR do not cite, on estimating monetary-policy reaction functions. Sometimes the money supply is taken as the variable to be explained and sometimes a short-term interest rate is. This work in effect considers the behavior of the monetary authorities overall phases of the business cycle, not just during recessions, as RR focus on. I see no reason to restrict the analysis to recessions. It is just as interesting and important to consider how the authorities behave during booms and normal times.

This paper provides robust evidence for the nonlinear effects of mortgage spread shocks during recessions and expansions in the United States. Estimating a smooth‐transition vector autoregression (STVAR) model, we show that mortgage spread shocks hitting in a recessionary phase create significantly deeper and more protracted declines in consumption and housing market variables. In addition, we provide evidence that these mortgage spread shocks could be largely interpreted as credit supply shocks in the mortgage market. Our empirical results imply that unconventional monetary policy, such as the Federal Reserve's mortgage‐backed security purchase program, would be a more effective tool for stabilizing the economy during recessions than in expansions. [ABSTRACT FROM AUTHOR]

Copyright of Acta Economica is the property of University of Banja Luka, Faculty of Economics and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

In this paper, we analyse the volatility of US GDP growth using quarterly series starting in 1875. We find structural breaks in volatility at the end of World War II and at the beginning of the Great Moderation period. We show that the Great Moderation volatility reduction is only linked to changes in expansions, whereas that after World War II is due to changes in both expansions and recessions. We also propose several methodologies to date the US business cycle in this long period. We find that taking volatility into account improves the characterization of the business cycle. [ABSTRACT FROM AUTHOR]

Presents the author's comment on article by Julio J. Rotemberg and Michael Woodford correlation between markups and factory cost and business cycle. Reading this paper reminding me of the time I decided to give up macroeconomics. It was about a dozen years ago. I was an undergraduate at Princeton, and I had just been taught God's truth about how the economy works. The IS-LM model explains the downward-sloping aggregate demand curve. The upward-sloping aggregate supply comes from the assumption of a flexible price level and a nominal wage that is fixed in the short run. Armed with these powerful tools of analysis, I reached the conclusion that recessions must be quite popular. Sure, a few people get laid off. But most people get to enjoy the higher real wages that result when prices fall and their nominal wages do not. So I went to one of my professors -- Alan Blinder I think it was -- to ask him about this. I had the vague recollection that recessions were, in fact, politically unpopular, but this just did not make any sense to me. If high real wages accompanied low employment, as the general theory and my professors had taught me, then most households should welcome economic downturns.

The focus of this paper is on aggregate U.S. labor productivity growth. Accordingly, we have taken real gross national product per labor hour employed as our indicator of labor productivity. Table I shows the history of labor productivity over the 1947–1973 period. The time periods reported in Table I were chosen to encompass peak periods of economic activity. This should minimize business cycle distortions of productivity movements. The data in Table I suggest that productivity has slowed considerably. It is important to ask whether the slowdown is permanent in nature. A closely related issue is the question of whether economic policy measures can be designed which would significantly affect long-run productivity growth. The only way to resolve these issues is to undertake a careful accounting of the sources of productivity growth and to develop forecasts of movements in the factors which affect productivity. The analysis of this paper indicates that the slowdown in productivity growth, in the 1970's in particular, can be traced to a very slow growth in the capital/labor ratio in the years 1970–75 and to a change in the labor force mix because of the entrance into the work force of large numbers of young and inexperienced workers. [ABSTRACT FROM AUTHOR]

This paper tests for structural changes in the duration of bull regimes in 18 developed and emerging economies' adjusted market capitalization stock indexes, by using the novel approach of Nicolau (Econ Lett 146:64–67, 2016) as well as two additional new procedures introduced here; and investigates whether the structural changes detected in the bull markets' duration are connected to the business cycle. We conclude that changes in the duration of bull market regimes seem to precede periods of economic recession. The results provide statistically significant evidence that decreases in bull markets' duration do not occur independently from economic crises, as 13 out of the 18 markets considered in our sample verify such decreases at least 12 months prior to the occurrence of an economic crisis. Additionally, these structural changes seem to affect smaller companies first, and then the larger ones. The association between decreases in the bull market regimes' duration and economic crises is possibly a consequence of financial markets' leading behavior over the economy. These structural changes may serve as proxies for decreasing confidence in financial markets, which naturally affects economic stability. [ABSTRACT FROM AUTHOR]

This paper deals with the problems of assessing the effects of fiscal policy in the European Monetary Union. Here, we face wide cross-country differences in key fiscal parameters, some of which may also be vary over time (business cycle). Moreover, these effects may also depend on trade spillover effects and thus on the extent of policy coordination. Our empirical analyses make use of data for 15 EU countries, mainly for the period 1970-2011. The results clearly indicate that fiscal multipliers are not constant across countries and time, being much larger during economic recessions. By contrast, the policy coordination-effects appear to be more homogenous, although it turns out that small countries may benefit more from coordination. [ABSTRACT FROM AUTHOR]

This paper examines the out-of-sample performance of various financial variables as predictors of U.S. recessions. Series such as interest rates and spreads, stock prices, and monetary aggregates are evaluated individually and in comparison with other financial and nonfinancial indicators. The analysis focuses on out-of-sample performance from one to eight quarters ahead. Results show that stock prices are useful with one- to three-quarter horizons, as are some well-known macroeconomic indicators. Beyond one quarter, however, the slope of the yield curve emerges as the clear individual choice and typically performs better by itself out of sample than in conjunction with other variables.

The purpose of the paper is to emphasize the contribution of Mykhaylo Ivanovych Tugan-Baranovsky to Business Cycle theory and its legacy among French economists. Tugan-Baranovsky (1864–1919), a prominent Ukrainian economist was a cycle theorist who was inspired by some French or francophone economists whose language he mastered. His theory of industrial crises proved influential upon some major economists during the first quarter of the twentieth century until the Great Depression, from Spiethoff to Hayek and Keynes. We present both the history and analytical content of industrial crises in the French version of TuganBaranovsky’s masterpiece. We provide an overview of Tugan-Baranovsky’s intellectual legacy as for his French-speaking followers, namely, Lescure, Aftalion, Robertson and Bouniatian. The ebb and tide of Tugan-Baranovsky’s influence can be understood throughout two episodes: the shift from real to monetary cycles in the interwar period and the revival of real business cycles alongside New Classical Economics in the 1980s, which proves relevant again in the context of the current Great Lockdown Recession. [ABSTRACT FROM AUTHOR]

This paper examines whether earning a college or graduate degree in a recession or an economic boom has lasting effects on job satisfaction. Across three studies, well-educated graduates who entered the workforce during economic downturns were more satisfied with their current jobs than those who entered during more prosperous economic times. Study 1 showed that economic conditions at college graduation predicted later job satisfaction even after accounting for different industry and occupational choices. Study 2 replicated these results and found that recession-era graduates were more satisfied with their jobs both early and later in their careers and even when they earned less money. A third cross-sectional study showed that people who entered the workforce in bad economies were less likely to entertain upward counterfactuals, or thoughts about how they might have done better, and more likely to feel grateful for their jobs, both of which mediated the relationship between economic conditions at workforce entry and job satisfaction. While past research on job satisfaction has focused largely on situational and dispositional antecedents, these results suggest that early workforce conditions also can have lasting implications for how people affectively evaluate their jobs. [ABSTRACT FROM PUBLISHER]

Copyright of Taiwan Economic Forecast & Policy is the property of Institute of Economics, Academia Sinica, Taiwan Economic Forecast & Policy and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper presents a forecasting model of unemployment based on labor force flows data that, in real time, dramatically outperforms the Survey of Professional Forecasters, historical forecasts from the Federal Reserve Board's Greenbook, and basic time-series models. Our model's forecast has a root-mean-squared error about 30 percent below that of the next-best forecast in the near term and performs especially well surrounding large recessions and cyclical turning points. Further, because our model uses information on labor force flows that is likely not incorporated by other forecasts, a combined fore-cast including our model's forecast and the SPF forecast yields an improvement over the latter alone of about 35 percent for current-quarter forecasts, and 15 percent for next-quarter forecasts, as well as improvements at longer horizons. [ABSTRACT FROM AUTHOR]

How large is volatility due to large firms? We answer this question through both reduced-form analysis and a calibration exercise. First, we exploit time and spatial variation across German cities and show that higher concentration is associated with more persistent local business cycles, and local concentration Granger causes local employment volatility. From a business cycle perspective, we find evidence in favor of granularity-driven recessions only. Next, we calibrate a structural model along the lines of Carvalho and Grassi (2019) and find that the more fat-tailed productivity distribution in bigger cities crucially depends also on the higher probability that firms will grow. [ABSTRACT FROM AUTHOR]

This work estimates Markov switching models on real-time data and shows that the growth rate of gross domestic income (GDI), deflated by the gross domestic product (GDP) deflator, has done a better job recognizing the start of recessions than has the growth rate of real GDP. This result suggests that placing an increased focus on GDI may be useful in assessing the current state of the economy. In addition, the paper shows that the definition of a low-growth phase in the Markov switching models changed considerably from 1978 to 2005. The models increasingly came to define this phase as an extended period of around zero rather than negative growth, diverging somewhat from the traditional definition of a recession. [ABSTRACT FROM AUTHOR]

Copyright of Canadian Journal of Economics is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper adapts the non-parametric dynamic time warping (DTW) technique in an application to examine the temporal alignment and similarity across economic time series. DTW has important advantages over existing measures in economics as it alleviates concerns regarding a pre-defined fixed temporal alignment of series. For example, in contrast to current methods, DTW can capture alternations between leading and lagging relationships of series. We illustrate DTW in a study of US states' business cycles around the Great Recession, and find considerable evidence that temporal alignments across states dynamic. Trough cluster analysis, we further document state-varying recoveries from the recession. [ABSTRACT FROM AUTHOR]

The aim of this paper is to analyse whether the evolution of NO2 and PM10 emission levels in the Madrid metropolitan area with heavy traffic are affected by business cycles (comprised of a boom, recession and recovery). Therefore, we explore if economic developments act as automatic environmental stabilizers in an urban context in order to provide guidelines for environmental policymaking in large cities. Considering the continuous nature of the particles that this paper analyses, functional data have been used and the most suitable statistical method has been applied to this information’s typology. The aim is to capture the behaviour of NO2 and PM10 particles throughout the booming years (2001-2005), the recession (2008-2012) and the recovery (2014-2018) periods. The results obtained through the Kendall’s functional Tau statistic have revealed that the similarities and differences found between the booming years, the recession and the recovery prove the effect of the economy’s cyclical fluctuations on pollution levels. This is due to the fact that the negative and close to zero correlations obtained through these periods represent a sign that pollution levels regarding these two particles are significantly different during the phases of business cycles. [ABSTRACT FROM AUTHOR]

This paper examines whether people's mood and optimism affect economic activity. We consider two sets of exogenous proxies for optimism that are unrelated to the economic environment: (1) weather (average temperature and cloud cover) and (2) sports and political optimism. We show that economic recessions are weaker and expansions are stronger in the United States where local individuals are more optimistic. Further, local optimism has a stronger impact on state‐level business cycles of smaller states and regions with low levels of risk sharing. In contrast, the incremental effects of local optimism are weaker in states where people are younger, more educated and sophisticated, and socially more connected. States with larger concentration of minority and urban population also exhibit lower sensitivity to variations in mood and optimism. Alternative explanations based on the state's industrial composition, tax environment, migration, seasonal affective disorder (SAD), oil shocks, and direct economic impact of weather cannot explain these findings. [ABSTRACT FROM AUTHOR]

Copyright of Canadian Journal of Economics is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Comments on an article by Wayne Vroman concerning the unemployment insurance (UI) financing and the 2001 recession in the U.S. Views on UI financing; Issue of severity of the 2001 recession; Ways to assess the extent to which UI counteracts the impact of recessions; Conclusion on the paper of Vroman.

As a group, professional portfolio managers have been largely unable to outperform the market buy-and-hold benchmark. Likewise, professional forecasters have been unable to predict recessions reliably. The paper contributes to the literature in two significant respects. First, the Recession Probability Model herein correctly forecasts out-of-sample the probability of a downturn and the binary state over a 45-year validation sample. This is important as it is around cyclical turning points that forecast errors are largest, and dependable forecasts are most useful. Reliable recession forecasts are essential for risk-management, planning capital outlays, and for portfolio management. Moreover, accurate forecasts of the turn allow policy-makers to mitigate the social cost of recessions. Second, the paper shows that it is extremely profitable to switch from equities to T-bills when the one-quarter-ahead probability of recession reaches a certain threshold. Several market-timing rules dominate the buy-and-hold in terms of the risk-adjusted measures of Treynor, Sharpe, and Jensen. One trading rule achieves triple the terminal wealth of the buy-and-hold. [ABSTRACT FROM AUTHOR]

The article focuses on the recent recession. The recent recession and disappointing recovery have renewed interest in the cyclical behavior of the economy. The latest recession was the eighth in the last forty years. Each has involved massive job losses and sharply reduced rates of capital formation. Each has also reduced the inflation rate, although not always for long. The leading candidates for explaining these episodes are variations in fiscal and monetary policies, shocks to the economy from exogenous developments apart from policy, the internal dynamics of the economy, and combinations of some or all of these factors. The paper attempts to answer a number of questions about the recent recession and its predecessors. The paper has three main parts. A comparative analysis of the behavior and interaction of the main components of output and major policy variables around recessions is presented. Some unusual developments, particularly in employment, that may help explain some of the recent weakness in the recovery have been discussed. And the paper examines whether financial developments, in particular, bank capital shortages and business balance sheet problems, played a special role in inducing the latest recession or hindering its recovery.

The article presents a discussion related to business cycle written by Milton Gilbert and a reference to the paper written on the same topic by Jacques J. Polak and Rudolf R. Rhomberg. Europe has had only two recessions since the war, one in 1952 and one in 1958, contrasted with the four that the U.S. has had. The 1952 recession was due mainly to restraints exercised by the policy-making authorities for the purpose of correcting balance-of-payments difficulties, although the reaction from the Korean boom was also a factor, it was secondary. The 1958 recession was also due to policy restraints exerted during the three years from 1955 to 1957. These restraints were applied mostly to correct excess demand, overfull employment, and inflationary pressures, although balance-of-payments difficulties were a factor in some or most cases. Thus the only recessions resulted from policy measures, taken deliberately. The recessions also were ended by policy management. Restraints were relaxed when the authorities considered that expansion could be safely resumed. And it did resume.

This paper demonstrates theoretically that a financial shock can have highly persistent effects on international trade. Motivation is taken from the aftermath of the dramatic trade collapse in 2008-2009, which, despite a substantial recovery, has left a persistently slower growth rate in trade. We find conditions under which a transitory financial shock significantly reduces the investment by firms in entering the export market, and that this can have long-lasting effects on the range of goods exported and hence overall trade. Important to our mechanism are endogenous capital structure decisions by firms in response to the financial shock, and firm entry investment that requires traded goods. This mechanism provides an example of how firm dynamics can serve as a potent propagation mechanism, generating very long-lasting effects of transitory macroeconomic shocks. [ABSTRACT FROM AUTHOR]

In this paper, the Iran Business Cycle characteristics were investigated via numerous univariate and multivariate Markov-switching specifications. In this case Markov switching model MSM-ARMA is proposed for determining business cycles. We examined the stochastic properties of the cyclical pattern of the quarterly Iran real GDP between 1988 (1)-2008 (2). The empirical analysis consists of mainly three parts. First, a large number of alternative specifications were tried and few were adopted with respect to various diagnostic statistics. Then, all selected models were tested against their linear benchmarks. LR test results imply strong evidence in favor of the nonlinear regime switching behavior. In line with the main objective of research, proposed model for Iran business cycle is estimated by and result of this estimation showed that economic of Iran despite of having two periods of recession 1992(3)-1992(4) and 1995(1)-1995(2), is out of recession with moderate growth and also experienced growth with high rate in early period of studying. Also the possibility of resistance of recession regimes with moderate and high growth is 0.3, 0.92 and 0.5 respectively. The results show the economic tend to stay in moderate growth regime. [ABSTRACT FROM AUTHOR]

One unusual characteristic of the so-called 1958 recession was the continued rise in prices in the presence of declining output and employment. In this article the author discusses the possibility that inflation has been institutionalized in the economy as the result of structural developments in both labor and product markets. Consequently, within limits, the classic remedies for inflation may be inadequate, since they assume market characteristics and responses which are no longer relevant in many sectors of the economy. An earlier version of this paper was presented to the April 1958 meeting of the Midwest Economics Association. [ABSTRACT FROM AUTHOR]

How sensitive to business cycles are the earnings of top earners? And, how does the business cycle sensitivity of top earners vary by industry? We use a confidential dataset on earnings histories of US males from the Social Security Administration. On average, individuals in the top 1 percent of the earnings distribution are slightly more cyclical than the population average. But there are large differences across sectors; top earners in Finance, Insurance, and Real Estate (FIRE) and Construction face substantial business cycle volatility, whereas those in Services (who make up 40 percent of individuals in the top 1 percent) have earnings that are less cyclical than the average worker. [ABSTRACT FROM AUTHOR]

The evolution of resource requirements in developed countries after the 2008 crisis seemed to indicate that there is a process of dematerialization. This paper analyses dematerialization in a group of developed countries and the effects of the economic cycle on resource use. The aim is to determine whether dematerialization can be linked to the effects of the economic crisis or, on the contrary, is independent of the economic context. To do this, a descriptive part is proposed in which the existence of dematerialization over the last 50 years is analysed. Subsequently, a model is estimated in which the effect of recessionary, low-growth and normal growth periods on the consumption of material resources is contrasted. The raw material input is used as an indicator of the use of material resources, which makes it possible to link each country to all the resources it requires for the normal functioning of its economy, regardless of where they are consumed. Among the main results, it can be noted that reductions in resource consumption occur in periods of recession and low growth, while for growth above 2% there is no dematerialization. [ABSTRACT FROM AUTHOR]

The global financial recession of 2008-9 as well as historical precedents with financial crises suggest that financial shocks do translate into the labor markets. This paper first documents that financial recessions are different from other recessions in terms of their labor market impact, as they involve a larger employment/unemployment response conditioning on output. Second, it surveys the various mechanisms linking financial shocks to employment adjustment, developing a new theory of the effects of leverage on job creation and destruction. Third, it presents evidence coherent with one of such mechanisms, notably with the prediction that more leveraged firms experience larger job destruction during financial recessions, controlling for the scale of output falls. [ABSTRACT FROM AUTHOR]