Testing for business cycle asymmetry: some international evidence

Abstract

This letter applies tests for asymmetric ‘deepness’ and ‘steepness’ to the monthly industrial production indices of 16 OECD economics and the OECD aggregate. We report evidence of statistically significant deepness for Germany, and both deepness and steepness for Japan, Sweden and, more marginally, the US. For Sweden, these asymmetries are consistent with sharp falls in production during recession, and gradual increases to high levels during recovery. For Japan and the US, these asymmetries are consistent with sharp falls in industrial production to low levels during recession and more gradual and moderate increases in production during recovery.