Fluctuations in Confidence and Asymmetric Business Cycles

  title={Fluctuations in Confidence and Asymmetric Business Cycles},
  author={Simon M. Potter},
There is now a great deal of empirical evidence that business cycle uctuations contain asymmetries. The asymmetries found in post-war US data are inconsistent with the behavior of the US economy in the Great Depression. In a model where business cycle asymmetries are produced by rational uctuations in the con dence of investors, I examine whether this inconsistency can be explained by di erences in government policy. It is found that the `ineptness' of government intervention during the Great… CONTINUE READING

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