  We test the international applicability of Friedman s famous plucking theory
of the business cycle in 12 advanced economies between 1970 and 2021. We find
that in countries where labour markets are flexible (Australia, Canada, United
Kingdom and United States), unemployment rates typically return to
pre-recession levels, in line with Friedman s theory. Elsewhere, unemployment
rates are less cyclical. Output recoveries differ less across countries, but
more across episodes: on average, half of the decline in GDP during a recession
persists. In terms of sectors, declines in manufacturing are typically fully
reversed. In contrast, construction-driven recessions, which are often
associated with bursting property price bubbles, tend to be persistent.
