Some international evidence on double dip recession
The phenomenon of double dip recession is not discussed theoretically nor examined empirically. An informal survey of about fifteen macroeconomics textbooks at both the principles and intermediate levels reveals that the phrase double dip recession appears only twice and is never defined. The National Bureau of Economic Research likewise does not define this concept. The primary objectives of this paper are to offer a workable definition of a double dip recession and provide some evidence on double dip recession from various countries of the world.
Data/Methods
For this paper, we employ the standard economics textbook definition of a recession as a decrease of real gross domestic product for two consecutive quarters of time. We next define a double dip recession as a decrease of real gross domestic product which begins after the trough of the previous business cycle and prior to the previous peak level of real gross domestic product, which we refer to as the reversion point. With these definitions, we examine quarterly data on real GDP for the time period 1960 – 2013 for ten OECD countries (Australia, Canada, France, Germany, Italy, Japan, Mexico, Spain, the United Kingdom and the United States) for turning points, reversion points and double dip recessions. By extension, we also examine the data for triple dip recession.
This paper is descriptive, i.e., we seek only to identify the occurrence of double dip recession in various world economies and neither speculate on their causes nor analyze their effects.
Results/Expected Results
The primary conclusion of this paper is that double dip recessions, at least for the economies examined with the definition employed, are fairly common. More specifically, double dip recessions account for sixteen percent of the total number of recessions for the ten countries over the examined time period. A secondary conclusion is that sixty seven percent of the documented double dip recessions occurred during the financial crisis or Great Recession of 2008.