Abstract

We document the properties of business cycles of 65 countries —22 industrial countries and 43 emerging market economies (EMEs)— over the period 1970q1-2007q4 using the dating algorithm by Harding and Pagan (2002). We find that: first, recessions are deeper, steeper and costlier among EMEs (especially, in East Asia and Latin America). Second, recoveries are swifter and stronger among EMEs (partly due to a stronger rebound effect). Third, recessions became less costly during the globalization period (1990-2007 vis-à-vis 1970-89) for industrial countries and EMEs. This may reflect the institutional changes associated to the Great Moderation. Fourth, depth and cost of downturns are related to the incidence of economic crisis episodes. Fifth, the dynamic behavior of macroeconomic indicators around peaks in real GDP is more volatile in downturns associated with crisis compared to other downturns. Sixth, peaks in financial cycles (credit and asset prices) tend to precede peaks in real output cycles. Finally, when looking at output cycles during the recent global financial crisis (when compared to pre-crisis globalization period), we find that although both industrial and emerging markets experienced deep recessions, it is the latter rather than the former group that had a faster recovery.