The Great Recession. Worse than ever?

Abstract

We develop an international comparative assessment of the Great Recession, in terms of the features that characterize the form of the recession phases, namely length, depth and shape. The potential unobserved heterogeneity in the international recession characteristics is modeled by a finite mixture model. Using Bayesian inference via Gibbs sampling, the model classiffies the Great Recession suffered by a large number of countries into dfferent clusters, determining its severity in cross section and time series and dimensions. Our results suggest that the business cycle features of the Great Recession are not dfferent from others in an international perspective. By contrast, we show that the only distinctive feature of the Great Recession wasits unprecedented degree of synchronicity.