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The Evaluation of Economic Recession Magnitude: Introduction and Application

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  • Jiří Mazurek
  • Elena Mielcová

Abstract

We propose a new quantitative recession magnitude scale for measuring recessions' magnitudes ('strength') derived from GDP growth rates during a recession and its duration. Furthermore, we introduce a qualitative scale with four recession categories: minor, major, severe and ultra, where the categories are defined by the magnitude scale. We use both scales to evaluate several well known economic recessions of the 20th and the 21st centuries. We have found that the Great Depression in 1929-1933 and recessions in Russia and Ukraine in the 1990s belong to ultra recessions, while the recent 2007-2009 financial crisis falls mainly into major (EU and Japan) and severe (USA) category.

Suggested Citation

  • Jiří Mazurek & Elena Mielcová, 2013. "The Evaluation of Economic Recession Magnitude: Introduction and Application," Prague Economic Papers, Prague University of Economics and Business, vol. 2013(2), pages 182-205.
    • Handle: RePEc:prg:jnlpep:v:2013:y:2013:i:2:id:447:p:182-205
    DOI: 10.18267/j.pep.447
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    References listed on IDEAS

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    1. Kim, Chang-Jin & Nelson, Charles R, 1999. "Friedman's Plucking Model of Business Fluctuations: Tests and Estimates of Permanent and Transitory Components," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 31(3), pages 317-334, August.
    2. Arthur F. Burns, 1958. "The Current Business Recession," The Journal of Business, University of Chicago Press, vol. 31, pages 145-145.
    3. Coe, Patrick J, 2002. "Financial Crisis and the Great Depression: A Regime Switching Approach," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 34(1), pages 76-93, February.
    4. Maximo Camacho & Gabriel Perez-Quiros, 2002. "This is what the leading indicators lead," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 17(1), pages 61-80.
    5. Morris Goldstein, 1998. "The Asian Financial Crisis," Policy Briefs PB98-1, Peterson Institute for International Economics.
    6. Arthur F. Burns & Wesley C. Mitchell, 1946. "Measuring Business Cycles," NBER Books, National Bureau of Economic Research, Inc, number burn46-1, February.
    7. Raffaele Miniaci & Guglielmo Weber, 1999. "The Italian Recession Of 1993: Aggregate Implications Of Microeconomic Evidence," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 237-249, May.
    8. N/A, 2009. "On the Recession," Local Economy, London South Bank University, vol. 24(3), pages 253-253, May.
    9. Harding, Don & Pagan, Adrian, 2002. "Dissecting the cycle: a methodological investigation," Journal of Monetary Economics, Elsevier, vol. 49(2), pages 365-381, March.
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    Citations

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    Cited by:

    1. Di Shang & Chang Yu & Gang Diao, 2021. "Study on Impacts of COVID-19 Pandemic Recession Based on Monte Carlo Simulation," Prague Economic Papers, Prague University of Economics and Business, vol. 2021(6), pages 724-747.
    2. Jiri Mazurek, 2014. "Examination of European Union economic cohesion: A cluster analysis approach," Business and Economic Horizons (BEH), Prague Development Center, vol. 9(4), pages 8-17, January.
    3. Jiří, Mazurek, 2012. "On some issues concerning definition of an economic recession," MPRA Paper 43381, University Library of Munich, Germany.
    4. Mazurek, Jiri, 2013. "A Comparison of GDP growth of European countries during 2008-2012 period from regional and other perspectives," MPRA Paper 51178, University Library of Munich, Germany.
    5. Mazurek Jiří, 2016. "The Evaluation of Recession Magnitudes in EU Countries during the Great Recession 2008–2010," Review of Economic Perspectives, Sciendo, vol. 16(3), pages 231-244, September.
    6. Mazurek, Jiří, 2014. "The evaluation of recession magnitudes in EU countries during the global financial crisis 2008-2010," MPRA Paper 56451, University Library of Munich, Germany.
    7. Mazurek Jiří, 2015. "A Comparison Of GDP Growth Of European Countries During 2008-2012 From The Regional And Other Perspectives / Porównanie Wzrostu Pkb W Okresie 2008-2012 W Krajach Europejskich Z Regionalnej I Innej Per," Comparative Economic Research, Sciendo, vol. 18(3), pages 5-18, August.
    8. Mazurek, Jiří, 2013. "The Great Recession: a comparison of recession magnitudes in Europe, USA and Japan," MPRA Paper 51428, University Library of Munich, Germany.

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    More about this item

    Keywords

    recession; business cycle; financial crisis; recession classification; recession magnitude;
    All these keywords.

    JEL classification:

    • B49 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Other
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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