Permanent and Transitory Components in Macroeconomic Fluctuations
AbstractFluctuations in real GNP have traditionally been viewed as transitory deviations from a deterministic time trend. The purpose of this paper is to review some of the recent developments that have led to a new view of output fluctuations and then to provide some additional evidence. Using post-war quarterly data, it is hard to reject the view that real GNP is as persistent as a random walk with drift. We also consider the hypothesis that the recent finding of persistence are due to the failure to distinguish the business cycle from other fluctuations in real GNP. We use the measured unemployment rate to decompose output fluctuations. We find no evidence for the view that business cycle fluctuations are more quickly trend-reverting.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2169.
Date of creation: Feb 1987
Date of revision:
Publication status: published as Campbell, John and N. Gregory Mankiw. "American Economic Review, Vol. 77, No. 2, May 1987, pp. 111-117.
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Other versions of this item:
- Campbell, John Y & Mankiw, N Gregory, 1987. "Permanent and Transitory Components in Macroeconomic Fluctuations," American Economic Review, American Economic Association, American Economic Association, vol. 77(2), pages 111-17, May.
- Mankiw, N. Gregory & Campbell, John, 1987. "Permanent and Transitory Components in Macroeconomic Fluctuations," Scholarly Articles 3207697, Harvard University Department of Economics.
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NBER Working Papers
0339, National Bureau of Economic Research, Inc.
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