The Duration Of Business Cycle Expansions And Contractions: Are There Change-Points In Duration Dependence?
The issue of whether the likelihood of an expansion or contraction ending is dependent on its age, i.e whether they are duration dependent is widely addressed in the business cycles literature and evidence of positive duration dependence is found in several studies. However, there is an important issue that has not been explored in this literature yet: the presence of change-points in duration dependence. All the studies in this field depart from the assumption that the magnitude of duration dependence is the same over time. However, the authors conjecture that the degree of likeliness of an expansion or contraction ending as it gets older might change after a specific duration.