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Changes in Business Cycles: Evidence and Explanations

Christina D. Romer

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER)

February 1999

NBER Working Paper No. w6948

This paper analyzes changes in American business cycles over the twentieth century and suggests a possible explanation for the major changes that have and have not occurred. The empirical analysis shows that the volatility of annual real macroeconomic indicators and the average severity of recessions have declined only slightly between the pre-World War I and post-World War II eras. Recessions have, however, become somewhat less frequent and more uniform. The paper goes on to suggest that the advent of macroeconomic policy after World War II can account for both the continuity and the changes in business cycles. Countercyclical monetary policy and automatic stabilizers have prolonged postwar expansions and prevented severe depressions. At the same time, policy-induced booms and recessions have led to the continued volatility of the postwar economy.

Number of Pages in PDF File: 49

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Date posted: March 4, 1999  

Suggested Citation

Romer, Christina D., Changes in Business Cycles: Evidence and Explanations (February 1999). NBER Working Paper No. w6948. Available at SSRN: http://ssrn.com/abstract=150071

Contact Information

Christina D. Romer (Contact Author)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
University of California, Berkeley - Department of Economics ( email )
549 Evans Hall #3880
Berkeley, CA 94720-3880
United States
510-642-4317 (Phone)
510-642-6615 (Fax)
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References:  37
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