The cost of business cycles and the benefits of stabilization

Gadi Barlevy

Economic Perspectives, 2005, vol. 29, issue Q I, 32-49

Abstract: This article reviews the social cost of U.S. postwar business cycle fluctuations, first calculated by Lucas (1987). Recent work suggests this cost is considerably larger than suggested by Lucas. Despite this, the author argues that it is not obvious that policymakers should have pursued a more aggressive stabilization policy over the postwar period. Still, because volatility is costly, stable growth remains a desirable goal.

Keywords: Business; cycles (search for similar items in EconPapers)
Date: 2005
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