Testing for Asymmetry in the Measured and Underground Business Cycles in New Zealand*

In this paper we consider the cyclical component of the underground economy in New Zealand, and compare some of its characteristics with those of the corresponding cycle in real measured GDP. Comparisons are made between the turning points of the two cycles, and formal tests for cyclical asymmetry (in terms of both ‘steepness' and ‘deepness’) are conducted. The turning‐point comparisons reinforce earlier results of Giles (1996a) on the causal linkages between the measured and underground economies. We find that there is no evidence of asymmetry in the cycles for either measured or underground output.