Recessions and Recoveries in New Zealand’s Post-Second World War Business Cycles

Abstract

We compute classical real GDP business cycles and growth cycles, contrast classical recessions with ‘technical’ recessions, and assess the sensitivity of our peaks and troughs to data revisions. Using this information we find that, on average, real GDP and employment cycles have had an 89% association. Other key findings are (i) New Zealand’s average pattern of recovery has differed from that for U.S. NBER cycles, but their most recent recession and recovery paths have been unusually similar; (ii) the strength of New Zealand's business cycle recoveries has been independent of the depth, duration, or severity of the preceding recession; and (iii) investment is an important component of expansions, and in the current cycle it has been residential investment and plant and equipment investment that have been unusually slow to recover their levels at prior business cycle peaks.