The duration of recessions follows an exponential not a power law

TL;DR

This paper re-examines GDP data of 17 economies and finds that recession durations follow an exponential distribution rather than a power-law, challenging previous conclusions.

Contribution

It demonstrates that recession durations are better modeled by an exponential law, correcting prior claims of a power-law distribution.

Findings

Recession durations follow an exponential distribution.

Previous power-law claims are not supported by the data.

Implications for economic modeling and forecasting.

Abstract

Ormerod and Mounfield analysed GDP data of 17 leading capitalist economies from 1870 to 1994 and concluded that the frequency of the duration of recessions is consistent with a power-law. But in fact the data is consistent with an exponential (Boltzmann-Gibbs) law.