Alternative methods to measuring the Romanian economy’s business cycle

Abstract

In the following paper we will present a series of mathematical models that have the scope of approximating the business cycle of the Romanian economy for the period between 1995 and 2022 by using quarterly data of the Gross Domestic Product. The main findings of the paper suggest the use of three different methods for approximating the business cycle, with very interesting and varied results. The accuracy of the approximation of the proposed methods is compared to the traditional method of using the Hodrick-Prescott filter. The originality of the paper lays in applying different methods of calculating the business cycle and comparing their effectiveness for the case of the Romanian economy. In this case we observe that when comparing the methods for the Romanian economy, the alternatives to the Hodrick-Prescott filter are viable and useful.