Alternative diagnostic tests of asymmetric adjustment: a cross-country application and comparison
Export and import data for five major OECD economies (Australia, Canada, Japan, the UK and the USA are subjected to tests of asymmetric adjustment. Rather than employing a single means of detecting asymmetry, tests of business cycle asymmetry and diagnostic tests of time deformation are both employed. The application of two approaches allows additional evidence of significant asymmetric adjustment to be uncovered as each method finds asymmetry undetected by the other. Cross-country comparisons prove of interest as significant variation is found in the asymmetric behaviour exhibited by the economies considered.