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On the Sources of the Great Moderation

Listed author(s):
  • Luca Gambetti
  • Jordi Galí

The Great Moderation in the US economy has been accompanied by large changes in the comovements among output, hours, and labor productivity. Those changes are reflected in both conditional and unconditional second moments as well as in the impulse responses to identified shocks. Among other changes, our findings point to an increase in the volatility of hours relative to output, a shrinking contribution of nontechnology shocks to output volatility, and a change in the cyclical response of labor productivity to those shocks. That evidence suggests a more complex picture than that associated with "good luck" explanations of the Great Moderation. (JEL: E23, E24, J22, J24)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/mac.1.1.26
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File URL: http://www.aeaweb.org/aej-macro/data/2007-0005_data.zip
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Article provided by American Economic Association in its journal American Economic Journal: Macroeconomics.

Volume (Year): 1 (2009)
Issue (Month): 1 (January)
Pages: 26-57

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Handle: RePEc:aea:aejmac:v:1:y:2009:i:1:p:26-57
Note: DOI: 10.1257/mac.1.1.26
Contact details of provider: Web page: https://www.aeaweb.org/aej-macro
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  7. Regis Barnichon, 2007. "Productivity, aggregate demand and unemployment fluctuations," LSE Research Online Documents on Economics 19694, London School of Economics and Political Science, LSE Library.
  8. James H. Stock & Mark W. Watson, 2003. "Has the Business Cycle Changed and Why?," NBER Chapters,in: NBER Macroeconomics Annual 2002, Volume 17, pages 159-230 National Bureau of Economic Research, Inc.
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  33. repec:bla:restud:v:65:y:1998:i:3:p:361-93 is not listed on IDEAS
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