The Great Depression reconsidered as a multi-dip event

The phenomenon of double-dip recession is seldom discussed theoretically and just as rarely examined empirically. Indeed, the National Bureau of Economic Research does not define this concept either systematically or casually. Specifically, an informal survey of macroeconomics textbooks at both the introductory and intermediate levels reveals that the phrase "double-dip recession" appears only twice and is never defined. In earlier papers presented at the International Atlantic Economic Conferences, we applied our particular definition of a double-dip recession to real gross domestic product equivalent data gathered from more than 20 Organization for Economic Cooperation and Development nations. This paper continues the aforementioned research on the unique macroeconomic backdrop of the Great Depression.

As in our earlier papers, the methodology employed here is that of the standard textbook definition of a recession as any decrease of real gross domestic product for two or more consecutive quarters. We then define a double-dip recession as a decrease of real GDP which begins after the trough of the cycle but below the previous peak level of real GDP, which henceforth will be called the reversion point. Utilizing these definitions, we examine quarterly data on real GDP for the time period of the Great Depression for both the United States and Great Britain.

A cursory glance at our data sets reveals foundationally that a clear distinction can be drawn between the two nations' movements in aggregate output. Specifically, both trend movements and the degree of kurtosis are distinct between the US and Great Britain data. Most relevant to our conclusion is that while the two data sets are quite distinct from each other, the characterization of the Great Depression as a multi-dip event in both the United States and Great Britain is nonetheless and indeed correct.