On the Sources of the Great Moderation

Galí, Jordi and Luca Gambetti
Authors registered in the RePEc Author Service: Jordi Galí

No 6632, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The remarkable decline in macroeconomic volatility experienced by the U.S. economy since the mid-80s (the so-called Great Moderation) has been accompanied by large changes in the patterns of comovements among output, hours and labour productivity. Those changes are reflected in both conditional and unconditional second moments as well as in the impulse responses to identified shocks. That evidence points to structural change, as opposed to just good luck, as an explanation for the Great Moderation. We use a simple macro model to suggest some of the immediate sources which are likely to be behind the observed changes.

Keywords: Great moderation; Labour hoarding; Monetary policy rules; Structural vars; Technology shocks (search for similar items in EconPapers)
JEL-codes: E32 (search for similar items in EconPapers)
Date: 2008-01
New Economics Papers: this item is included in nep-cba and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

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Related works:
Journal Article: On the Sources of the Great Moderation (2009)
Working Paper: On the Sources of the Great Moderation (2008)
Journal Article: On the sources of the Great Moderation (2007)
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