Remeasuring Business Cycles

This paper evaluates the consistency of the NBER business cycle reference dates over time. Analysis of the NBER methods suggests that the early turning points are derived from detrended data, while the dates after 1927 are derived from data in levels. To evaluate the importance of this and other changes in technique, the paper derives a simple algorithm that matches the postwar NBER peaks and troughs closely. When this algorithm is applied to data for 1884-1940, the new dates systematically place peaks later and troughs earlier than do the NBER dates. Using the new business cycle chronology, recessions have not become shorter, less severe, or less persistent between the pre-World War I and the post-World War 11 eras. Expansions, however, have become longer.