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

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

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

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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. Jeffrey Edwards, 2006. "Politics, Inflation, and the Mundell-Tobin Effect," The Journal of Economics, Missouri Valley Economic Association, Missouri Valley Economic Association, vol. 32(2), pages 9-30.
    2. Ramirez-Rondán Nelson, 2007. "Nonlinear Volatility Effects on Growth in Developing Economies," Working Papers, Banco Central de Reserva del Perú 2007-016, Banco Central de Reserva del Perú.
    3. Thomas Beissinger, 2006. "Neue Anforderungen an eine gesamtwirtschaftliche Stabilisierung," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim, Department of Economics, University of Hohenheim, Germany 277/2006, Department of Economics, University of Hohenheim, Germany.

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