The Great Moderation is one of the most important changes in the US business cycle since statistics where gathered. This column contributes three main ideas – that output volatility remains subdued despite the tumult created by the Great Recession, that the Great Moderation structural break is found when considering a long historical dataset, and that the nature of the volatility reduction associated with the Great Moderation is linked to the features of expansion phases, in particular, to the absence of high growth recoveries.
Lola Gadea, Ana Gomez-Loscos, Gabriel Pérez-Quirós, Monday, October 26, 2015 - 00:00
Olivier Blanchard, Friday, October 3, 2014 - 00:00
Marcus Miller, Lei Zhang, Wednesday, September 10, 2014 - 00:00
Wouter den Haan, Vincent Sterk, Tuesday, November 8, 2011 - 00:00
Financial institutions played a leading role in the global crisis, and policymakers are under pressure to do something about them. This column argues that before any draconian measures are passed, we need to be reminded of the benefits of the financial sector and the innovation it provides.
Olivier Coibion, Yuriy Gorodnichenko, Saturday, January 16, 2010 - 00:00
Was the Great Moderation “something of a fluke”? This column argues that good monetary policy did play a role in taming inflation. It argues that the current recession, while clearly severe by historical standards, does not seem to imply a return to the levels of volatility observed in the 1970s.