AEA Home
AEA

Document Request

You have requested the following article:
Evaluating the Classification of Economic Activity into Recessions and Expansions
Travis J. Berge, Óscar Jordá
American Economic Journal: Macroeconomics. Apr 2011, Vol. 3, No. 2: Pages 246-277

Evaluating the Classification of Economic Activity into Recessions and Expansions

Travis J. Berge, 1

1Department of Economics, University of California at Davis, One Shields Ave., Davis, CA 95616.

Óscar Jordá2

2Department of Economics, University of California at Davis, One Shields Ave., Davis, CA 95616.

Abstract

The Business Cycle Dating Committee of the National Bureau of Economic Research provides a historical chronology of business cycle turning points. We investigate three central aspects of this chronology. How skillful is the Dating Committee when classifying economic activity into expansions and recessions? Which indices of economic conditions best capture the current but unobservable state of the business cycle? And which indicators best predict future turning points, and at what horizons? We answer each of these questions in detail using methods specifically designed to assess classification ability. In the process, we clarify several important features of the business cycle. (JEL C82, E32)