ARE DEEP RECESSIONS FOLLOWED BY STRONG RECOVERIES - RESULTS FOR THE G-7 COUNTRIES

The hypothesis is examined that the severity of a recession favourably affects the rate of growth of output during the period immediately af ter the recession. Our empirical analysis is based on the behaviour of industrial output in the G-7 countries during the period 1960 to 1985 . The depth of a recession, defined as the cumulative output loss betw een the peak and trough dates, is shown to be negatively correlated wi th growth in the first 12 months of the subsequent expansion.