Recent U.S. Macroeconomic Stability: Good Policies, Good Practices, or Good Luck?
- 1 August 2004
- journal article
- Published by MIT Press in The Review of Economics and Statistics
- Vol. 86 (3) , 824-832
- https://doi.org/10.1162/0034653041811662
Abstract
The volatility of U.S. real GDP growth since 1984 has been markedlylowerthanoverthepreviousquartercentury.Weutilizefrequency-domain and VAR methods to distinguish among competing explanations for this reduction: improvements in monetary policy, better business practices, and a fortuitous reduction in exogenous disturbances. We find that reduced innovation variances account for much of the decline in aggregate output volatility, suggesting that good luck is the most likely explanation. Good practices and good policy appear to have played a more important role in explaining the post-1984 decline in the volatility of consumer price inflation. © 2004 President and Fellows of Harvard College and the Massachusetts Institute of Technology.Keywords
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This publication has 2 references indexed in Scilit:
- The Long and Large Decline in U.S. Output VolatilityBrookings Papers on Economic Activity, 2001
- Macroeconomics and RealityEconometrica, 1980