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Will Stability Last?

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  • William Martin
  • Robert Rowthorn
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    Abstract

    There is no consensus about the causes of the reduction in business cycle volatility seen in many major economies over the last decade. Using stylised models of the economies of the US, Euro area, UK and Japan, we argue that economic stability has been fostered by improved monetary policy and by associated changes in the behaviour of inflation, which has itself led to a reduction in the volatility of economic shocks. Assuming an absence of cataclysmic events, our projections suggest that most major economies should continue to enjoy an unusual degree of stability.

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    File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2004/wp-cesifo-2004-11/cesifo1_wp1324.pdf
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    Bibliographic Info

    Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1324.

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    Date of creation: 2004
    Date of revision:
    Handle: RePEc:ces:ceswps:_1324

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    Keywords: growth volatility; inflation; stabilisation; business cycles; US; UK; Euro area; Japan;

    This paper has been announced in the following NEP Reports:

    References

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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The true inflation surprises
      by chris dillow in Stumbling and Mumbling on 2007-01-16 10:57:27
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    Cited by:
    1. Thomas Beissinger, 2006. "Neue Anforderungen an eine gesamtwirtschaftliche Stabilisierung," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 277/2006, Department of Economics, University of Hohenheim, Germany.
    2. Edwards, Jeffrey A., 2006. "Politics, Inflation, and the Mundell-Tobin Effect," MPRA Paper 36443, University Library of Munich, Germany.
    3. Ramirez-Rondán Nelson, 2007. "Nonlinear Volatility Effects on Growth in Developing Economies," Working Papers 2007-016, Banco Central de Reserva del Perú.

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