Output Fluctuations in the United States: What Has Changed Since the Early 1980s?

@inproceedings{McConnell1998OutputFI,
  title={Output Fluctuations in the United States: What Has Changed Since the Early 1980s?},
  author={Margaret Mary McConnell and Gabriel P{\'e}rez-Quir{\'o}s},
  year={1998}
}
We document a structural break in the volatility of U.S. GDP growth in the first quarter of 1984, and provide evidence that this break emanates from a reduction in the volatility of durable goods production. We find no evidence of increased stability in the nondurables, services or structures sectors of the economy. In addition, no other G7 country experienced a contemporaneous reduction in output volatility. Finally, we show that the reduction in durables volatility corresponds to a decline in… 

The decline in volatility in the US economy. A historical perspective

In this paper, we analyse the volatility of US GDP growth using quarterly series starting in 1875. We find structural breaks in volatility at the end of World War II and at the beginning of the

Has the Business Cycle Changed? Evidence and Explanations

Over the past 30 years, economic activity has become less volatile in most G-7 countries. In the United States, for example, the standard deviation of the growth rate of GDP averaged over four

Output Growth and Commodity Prices in Latin America: What Has Changed?

This paper documents important changes in real GDP growth of six large Latin American countries. The main results can be summarized as follows. First, there is evidence of a structural break in real

The Decline in Australian Output Volatility

There has been a large decline in the volatility of Australian output over the past 40 years. This paper looks at the causes of this decline. Accounting for part of the change have been substantial

The decline in German output volatility: a Bayesian analysis

Using Bayesian methods, we analyze whether a volatility reduction as documented for growth of U.S. gross domestic product (GDP) in the mid-1980s can also be detected for German GDP growth. Our

The Decline in the Volatility of Output Growth: Its Causes and Consequences for Financial Stability

Over the last four decades or more, the volatility of output growth in six of the G-7 industrialised economies has fallen significantly. In this article, we illustrate the decline in output growth

The Less-Volatile U.S. Economy

Using a Bayesian model comparison strategy, we search for a volatility reduction in U.S. real gross domestic product (GDP) growth within the postwar sample. We find that aggregate real GDP growth has

The International Business Cycle in a Changing World: Volatility and the Propagation of Shocks in the G-7

The changing relationships between the G-7 countries are examined through VAR models for quarterly growth, estimated over sub-periods and using a rolling data window. Trivariate models are employed,

Testing for a Structural Break in the Volatility of Real GDP Growth in Canada

This study tests for a structural break in the volatility of real GDP growth in Canada following the methodology of McConnell and Quiros (1998). A break is found in the first quarter of 1991. Based

What accounts for the postwar decline in economic volatility

Finally, we look at the broader picture to determine why the U.S. economy has had fewer and shorter recessions over the past 20 years. Over time, swings in the growth of many macroeconomic variables,
...

References

SHOWING 1-10 OF 45 REFERENCES

The Changing Cyclical Variability of Economic Activity in the United States

This paper examines the changing cyclical variability of economic activity in the United States. It first shows that the decline in variability since World War II cannot be explained by changes in

Has the U.S. Economy Become More Stable? A Bayesian Approach Based on a Markov-Switching Model of the Business Cycle

We hope to answer three questions: Has there been a structural break in postwar U.S. real GDP growth towards stabilization? If so, when? What is the nature of this structural break? We employ a

Cross-Country Evidence on the Link between Volatility and Growth

This paper presents empirical evidence against the standard dichotomy in macroeconomics that separates growth from the volatility of economic fluctuations. In a sample of 92 countries as well as a

Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory

We estimate a forward-looking monetary policy reaction function for the postwar United States economy, before and after Volcker’s appointment as Fed Chairman in 1979. Our results point to substantial

Have Postwar Economic Fluctuations Been Stabilized?

Previous investigations of whether the volatility of the U.S. economy diminished after World War II have been inconclusive because of questionable prewar macroeconomic aggregates. We examine, more

The Stabilization of the U.S. Economy Evidence from the Stock Market

Until recently, economists widely believed that economic activity had become less variable in the United States following the end of World War II. Challenging this belief, new research suggests that

Spurious Volatility in Historical Unemployment Data

This paper shows that the stabilization of the unemployment rate between the pre-1930 and post-1948 eras is an artifact of improvements in data collection procedures. Prewar methods are used to

Is the Stabilization of the Postwar Economy a Figment of the Data

This study of output data for the periods 1866-1914 and 1947-82 shows that much of the apparent stabilization of the postwar economy is an artifact of the way the historical data are constructed.

The Prewar Business Cycle Reconsidered: New Estimates of Gross National Product, 1869-1908

Traditional estimates of prewar GNP exaggerate the size of cycles because they are based on the assumption that GNP moves approximately one for one with commodity output valued in producer prices.