Page - 147 - in The Austrian Business Cycle in the European Context

147 The main differences between the approach of the NBER and the CEPR are that the latter uses quarterly data instead of monthly se- ries. Furthermore, the business cycle reflected in individual coun- tries plays a role in the dating procedure, too, which is not the case for the US. Seasonally adjusted GDP data seem to play the most important role for the CEPR method, without being the only ones. This imprecise definition of the business cycle, as in the case of the NBER, leaves large room for individual interpretation. A concentra- tion on growth rates alone (growth rate cycles) would imply that no distinction is made between trend or cycle growth rates. This reveals the adherence to the classical business cycle definition, if growth rates are not adjusted by their mean. But the CEPR stresses that looking at growth rates is not a fixed rule in its dating proce- dure. Nevertheless, focusing on growth rate cycles contains all the problems described in the theoretical chapter above, with the great disadvantage that the irregular component is superimposed making a reasonable dating nearly impossible. This danger is somewhat reduced by the criterion of two consecutive quarters of negative growth, but still there is no distinction between trend and business cycle growth. As it became apparent in our calculations on the basis of first- order-differenced series, fewer turning points have been detected than with other filtering methods. Here, the reason was that the Bry-Boschan dating algorithm recognises only turning points if there is no other contradictory information in close neighbour- hood. In the case of the CEPR method, the inclusion of trend growth rates shifts growth rates into the positive area, which re- duces considerably the number of turning points. In this way, the concept comes closer to the classical definition of the business cycle. It is therefore not surprising that the CEPR found only three complete cycles between 1970 and 2003. The first peak is dated at the third quarter of 197 4, with a following trough in 1Q1975. This cycle is outside the period analysed in the