B49 - Economic Methodology: OtherReturn

We propose a new quantitative recession magnitude scale for measuring recessions' magnitudes ('strength') derived from GDP growth rates during a recession and its duration. Furthermore, we introduce a qualitative scale with four recession categories: minor, major, severe and ultra, where the categories are defined by the magnitude scale. We use both scales to evaluate several well known economic recessions of the 20th and the 21st centuries. We have found that the Great Depression in 1929-1933 and recessions in Russia and Ukraine in the 1990s belong to ultra recessions, while the recent 2007-2009 financial crisis falls mainly into major (EU and Japan) and severe (USA) category.

The article analyses the economic development of transition economies (the CR, Hungary, Poland, Slovakia and Slovenia) in the nineties by means of the original graphical method based on a multidimensional view, with the intention to assess convergence or divergence of their economic level vis-a-vis the average level of the EU countries. The polydimensional aspect is based in the first step on four basic objectives of economic policy depicted by the macroeconomic (magic) tetragon. In the second step, an each quadrant of the magic tetragon is extended by six detailed indicators to get a multidimensional convergence polygon. The polygon framework allowed carrying out more detailed analysis of the convergence process. The detailed results of the multidimensional convergence analysis varied across individual countries and over time; the time path of these differences partly reflected the uneven progress in macroeconomic stabilization and recovery of economic growth.