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In this paper we analyze empirically how labor market institutions influence business cycle volatility in a sample of 20 OECD countries. Our results suggest that countries characterized by high union density tend to experience more volatile movements in output, whereas the degree of coordination of the wage bargaining system and the strictness of employment protection legislation appear to be only of limited importance. We also find some evidence suggesting that highly coordinated wage bargaining systems have a dampening impact on inflation volatility. [ABSTRACT FROM AUTHOR]

Turning point symmetry implies that a time series displays cycles that exhibit similar behavior around peaks and troughs. In this paper two tests for business cycle turning point symmetry are applied to industrial production data from a number of OECD countries. A Markov chain test provides very weak evidence for turning point asymmetry for these countries. Several problems with this approach are identified, and nonparametric methods are proposed as alternatives to the Markov chain test and reveal more clear-cut evidence for turning point asymmetry. [ABSTRACT FROM AUTHOR]

In this paper we analyse how the availability of credit influences the relationship between government size as a proxy for fiscal stabilization policy and the amplitude of business cycle fluctuations in a sample of advanced OECD countries. Interpreting relatively low loan-to-value ratios as an indication of tight credit constraints, we find that government size exerts a stabilizing effect on output and consumption growth fluctuations only when credit constraints are relatively tight. Our results provide support for the hypothesis that credit market frictions play a crucial role in the transmission of fiscal policy. [ABSTRACT FROM AUTHOR]

This study takes a fresh look at the nature of financial and real business cycles in OECD countries using annual data series and shorter quarterly economic indicators. It first analyses whether the last cycle has been different compared to previous cycles in terms of length, amplitude, asymmetry and changes of these parameters during expansions and contractions. We also study the degree of economic and financial cycle synchronization between OECD countries but also of economic and financial variables within a given country and gauge the extent to which cycle synchronization changed over time. We next describe the connection between the great moderation and the last cycle. Finally, the study discusses the synchronization between the real economy and the financial sector and provides some new evidence on the banking sector's pro-cyclicality by using aggregate and bank level. The main findings show that the amplitude of the real business cycle was becoming smaller during the great moderation, but asset price cycles were becoming more volatile. In part, this was linked to developments in the banking sector which tended to accentuate pro-cyclical behaviour. Greater synchronization of cycles may help explain the severity of the crisis. [ABSTRACT FROM AUTHOR]

This paper analyzes the effects of fiscal convergence on business cycle volatility and growth. Using a panel of 11 EMU and 21 OECD countries and 40 years of data, we find that countries with similar government budget positions tend to have smoother business cycles. That is, fiscal convergence (in the form of persistently similar ratios of government surplus/deficit to GDP) is systematically associated with smoother business cycles. We also find evidence that reduced business cycle volatility through higher fiscal convergence stimulates growth. Our empirical results are economically and statistically significant, and robust. [ABSTRACT FROM AUTHOR]

The existence of a quasi-periodic cycle in growth rates of major economic indicators has become one of the more popular stylized facts in interpreting postwar macro-dynamics. In this paper, we examine the statistical record of sixteen OECD countries over the 1950-1970 period to determine the degree of regularity in movements of annual growth rates in both GNP and several disaggregated components. The WALLIS-MOORE test is employed to establish the significance of the deviation of growth rate fluctuations from those of a purely random series. In only 13 of the 90 series investigated were these deviations statistically significant and in only two countries, Germany and Finland, were more than one growth series significantly non-random. These results suggest that there is little statistical significance to the growth cycle hypothesis from an annual perspective and that postwar macro-dynamics generally fail to reflect in the growth rate domain much of the regularity observed in the more traditional business cycle of the prewar period. [ABSTRACT FROM AUTHOR]

Abstract A multi-country real business cycle model is developed capturing two important aspects of heterogeneity found in household survey data: only a small fraction of the population holds stock, and a significant fraction of non-stockholders are borrowing constrained. The model is applied to data for twenty OECD countries. It generates cross-country consumption correlations consistent with those observed in the data. Potential welfare gains from international portfolio diversification by stockholders are large, leaving the observed "home bias" as a significant puzzle. The model can also account for the finding in U.S. data that consumption of stockholders is more volatile than that of non-stockholders. [ABSTRACT FROM AUTHOR]

We study the business-cycle behavior of segmented labor markets with flexibility at the margin (e.g., just affecting fixed-term contracts). We present a matching model with temporary and permanent jobs (i) where there is a gap in the firing costs associated with these types of jobs and (ii) where there are restrictions in the creation and duration of fixed-term contracts. We show that a labor market with ``flexibility at the margin'' increases the unemployment volatility with respect to one that is fully regulated. This analysis yields new insights into the interpretation of the recent volatility changes witnessed in the OECD area. [ABSTRACT FROM AUTHOR]

We investigate for 26 OECD economies whether their current account imbalances to GDP are driven by stochastic trends. Regarding bounded stationarity as the more natural counterpart of sustainability, results from Phillips–Perron tests for unit root and bounded unit root processes are contrasted. While the former hint at stationarity of current account imbalances for 12 economies, the latter indicate bounded stationarity for only six economies. Through panel-based test statistics, current account imbalances are diagnosed as bounded non-stationary. Thus, (spurious) rejections of the unit root hypothesis might be due to the existence of bounds reflecting hidden policy controls or financial crises. [ABSTRACT FROM AUTHOR]