Balcilar, MehmetGupta, RanganJooste, CharlRanjbar, Omid2017-05-152017-05-152016-02Balcilar, M, Rangan, G, Jooste, C & Ranjbar, O 2016, 'Characterising the South Africa business cycle : is GDP difference-stationary or trend-stationary in a Markov-switching setup?', Economia Internazionale/International Economics, vol. 69, no. 1, pp. 33-44.0012-981Xhttp://hdl.handle.net/2263/60465We test for a unit root in de-trended GDP in a two-state Markov switching specification using a modified Augmented Dickey-Fuller test. Our results show that a first difference GDP specification is preferred over the de-trended specification. In addition, the null of differencestationary GDP cannot be rejected. By implication, shocks to GDP are permanent which validates specifying trend GDP with a stochastic component – something that is inherently assumed in a number of research papers that estimate potential GDP growth and that model GDP in general equilibrium specifications.en© 2016. Camera di Commercio di GenovaMarkov-switchingDifference-stationaryTrend-stationaryGross domestic product (GDP)Article