  I examine global recessions as a cascade phenomenon. In other words, how
recessions arising in one or more countries might percolate across a network of
connected economies. A heterogeneous agent based model is set up in which the
agents are Western economies. A country has a probability of entering a
recession in any given year and one of emerging from it the next. In addition,
the agents have a unique threshold propensity to import a recession from the
agents with which they have the strongest connections. They are connected on a
small world topology, and an agent's neighbours at any time are either in
(state 1) or out (state 0) of recession. If the weighted sum exceeds the
threshold, the agent goes into recession. Annual real GDP growth for 17 Western
countries 1871-2006 is used as the data set. The distribution of the number of
countries in recession in any given year is exponential, as is the duration of
recessions within individual countries. The model is calibrated against these
two facts, plus the 'wait time' between recessions. It is able to replicate
them successfully. The network structure is essential for the agents to
replicate the stylised facts. The country-specific probabilities of entering
and emerging from recession by themselves give results very different to the
actual data.
