BA207_ Macroeconomics- Business Cycle Business Article

BA207_ Macroeconomics- Business Cycle Business Article

From Recession to Normalcy: Recoveries as a Third Phase of a Business Cycle

This article talked about how there should be a better understanding of how business cycles of recession and expansion work. It also talked about how the recovery phase of the business cycle is not being acknowledged, as it should. According to a newly published Center for Economic Policy Research discussion paper, an analysis of the recovery phase was produced for the United States Business Cycle. Originally, the business cycle had a revival phase which was between the recession and expansion phase. There is now a third phase that economist want to incorporate into the business cycle which is called the recovery phase. The article list key elements that are considered that make up what is being called the recovery phase. It also stated that defining the recovery phase can be challenging because there is no definition of what it means to have a normal trend output. Because there are different variables in a business cycle, it is difficult to come up with a consistent definition of the recovery phase. The author used a model developed by Morley and Piger, 2012, in which they estimated it with US Data to produce a measure of cyclical component of GDP. This is where I got really lost. I couldn’t quite understand the tables being shown within the site but I do understand how a recovery phase can be used in the business cycle.