Working Paper: NBER ID: w11157
Authors: Joseph H. Davis
Abstract: The NBER's pre-WWI chronology of annual peaks and troughs has the remarkable implication that the U.S. economy spent nearly every other year in recession, although previous research has argued that the post-Civil War dates are flawed. This paper extends that research by redating annual peaks and troughs for the entire 1796-1914 period using a single metric: Davis' (2004) annual industrial production index. The new pre-WWI chronology alters more than 40% of the peak and troughs, and removes cycles long considered the most questionable. An important implication of the new chronology is the lack of discernible differences in the frequency and duration of industrial cycles among the pre-Civil War, Civil War to WWI, and post-WWII periods. Of course, my comparison between pre-WWI and post-WWII cycles is limited by its reliance on a single annual index (as opposed to many monthly series) that is less comprehensive than GDP.
Keywords: Business cycles; Chronology; Industrial production
JEL Codes: N1; E3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Revised annual chronology of US business cycles (E32) | Identifies significant differences in the frequency and duration of cycles (E32) |
| NBER's methodology (E01) | Misclassification of growth cycles as recessions (E32) |
| Revised data (Y10) | Mean duration of prewar expansions doubles (N13) |
| Revised data (Y10) | Average length of contractions is reduced by one-third (Y60) |
| New industrial production dataset (D20) | Establishes claims about business cycles (E32) |