Volume 6, No. 3, December 2007

 

Asymmetric Business Cycle Fluctuations and Contagion Effects

in G7 Countries

Khurshid M. Kiani
Department of Finance, Bang College of Business, Republic of Kazakhstan
Abstract

This research studies possible existence of business cycle asymmetries in Canada, France, Germany, Italy, Japan, UK, and US real GDP growth rates. Asymmetries in these countries are modeled using in-sample as well as jackknife out-of-sample forecasts approximated from artificial neural networks. Univariate results show statistically significant evidence of asymmetries in business cycle fluctuations in all the series; this is corroborated with bivariate analysis, which also finds evidence of contagion effects in these countries.

Key words: asymmetries; business cycles; neural networks; nonlinearities; vector autoregressions
JEL classification: C32; C45; E32

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