The Great Moderation, Forecast Uncertainty, and the Great Recession

Ging Cee Ng and Andrea Tambalotti

No 20120514, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: The Great Recession of 2007-09 was a dramatic macroeconomic event, marked by a severe contraction in economic activity and a significant fall in inflation. These developments surprised many economists, as documented in a recent post on this site. One factor cited for the failure to anticipate the magnitude of the Great Recession was a form of complacency affecting forecasters in the wake of the so-called Great Moderation. In this post, we attempt to quantify the role the Great Moderation played in making the Great Recession appear nearly impossible in the eyes of macroeconomists.

Keywords: Macroeconomics; Forecasting; Great Recession (search for similar items in EconPapers)
JEL-codes: E2 (search for similar items in EconPapers)
Date: 2012-05-14
New Economics Papers: this item is included in nep-mac and nep-mon
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