Interpreting the great moderation
Subtitle: changes in the volatility of economic activity at the macro and micro levels
By: Steven J. Davis, James A. Kahn.
Contributors: Kahn, James A.; National Bureau of Economic Research.
Series: NBER working paper series -- working paper 14048; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 14048.
Publisher: National Bureau of Economic Research
Published: 2008
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "We review evidence on the Great Moderation in conjunction with evidence about volatility trends at the micro level.  We combine the two types of evidence to develop a tentative story for important components of the aggregate volatility decline and its consequences.  The key ingredients are declines in firm-level volatility and aggregate volatility -- most dramatically in the durable goods sector -- but the absence of a decline in household consumption volatility and individual earnings uncertainty.  Our explanation for the aggregate volatility decline stresses improved supply-chain management, particularly in the durable goods sector, and, less important, a shift in production and employment from goods to services.  We provide evidence that better inventory control made a substantial contribution to declines in firm-level and aggregate volatility.  Consistent with this view, if we look past the turbulent 1970s and early 1980s much of the moderation reflects a decline in high frequency (short-term) fluctuations.  While these developments represent efficiency gains, they do not imply (nor is there evidence for) a reduction in economic uncertainty faced by individuals and households"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 7/10/2008.

Includes bibliographical references.

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