High-Growth Recoveries, Inventories and the Great Moderation
44 Pages Posted: 23 Aug 2009
Date Written: August 21, 2009
We present evidence about the loss of the so-called "plucking effect", that is, a high-growth phase of the cycle typically observed at the end of recessions. This result matches the belief, presented informally by different authors, that recession may have now permanent effects, or recession have now an L shape versus old-time recessions that always had a V shape. We also show that the loss of the "plucking effect" can explain part of the Great Moderation. We postulate that these two phenomena may be due to changes in inventory management brought about by improvements in information and communications technologies.
Keywords: Business cycle features, Great Moderation, High-growth recovery
JEL Classification: E32, F02, C22
Suggested Citation: Suggested Citation