Asymmetry in business fluctuations: International evidence on Friedman's plucking model

Friedman's plucking model of business fluctuations suggests that output cannot exceed a ceiling level, and it is occasionally plucked downward by recession; output has depth and steepness. This study uses a sample of 12 industrial and emerging economies and finds some evidence that negative shocks are largely transitory, while positive shocks are mostly permanent. In a few cases, as implied by the plucking model, output fluctuations tend to be asymmetric: recessions are transitory, and duration dependent, although expansions are not. There is, however, serial correlation in almost all cases. International evidence on Friedman's plucking model is far from robust.