BIS Review 2/2005  5  6  BIS Review 2/2005  We have compared the average path of asset prices around the onset of the recession in these three episodes to the average path of asset prices in the other episodes in our sample (figure 2, top panel). The vertical line marks the quarter in which the recession began.
The dotted curve shows the average of the three asset-price related episodes, and the solid curve shows the average of the remaining twenty-two recession episodes in the sample.13 This comparison suggests that in recessions related to asset-price busts, asset prices fall before the recession more, on average, than they do in other episodes.