The phenomenon of double dip recession is neither discussed theoretically nor examined empirically. An informal survey of 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 objective of this paper is to offer a workable and consistent definition of a double dip recession and cite any evidence of double dip recessions from various countries.
Data/Methods
We employ the standard historical economics textbook definition of a recession, that being a decrease of real gross domestic product for two or more consecutive quarters. 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 is referred to as the reversion point. With these definitions, we examine quarterly data on real GDP for the time period 1960 – 2013 for fourteen OECD countries (Australia, Brazil, Canada, France, Germany, India, Italy, Japan, Korea, Mexico, Russia, 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. Our data is taken from the Quarterly National Accounts of the OECD, tables are updated on a daily basis. The "reference year" for the volume estimates or real gross domestic product numbers for the countries we examine is 2010.
Notably, this paper is entirely descriptive, i.e., nonparametric as we seek only to identify the occurrence of double dip recessions in various world economies. That is, we neither speculate on their causes through the use of a structural model nor analyze their endogenous effect on other things.
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.