The Two Greatest. Great Recession vs. Great Moderation
34 Pages Posted: 25 Sep 2014
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The Two Greatest. Great Recession vs. Great Moderation
Date Written: August 2014
Abstract
The collapse of the global economy in 2008, following the outbreak of the financial crisis, and the ensuing economic developments of the so-called Great Recession (GR) led many economists to suggest that the Great Moderation (GM) had, indeed, come to an end. This paper offers evidence that the decrease in output volatility still remains in force despite the GR and would do so even if the GR continues to extended horizons. This finding has important implications not only for academics, concerning the implementation of theoretical and empirical techniques, but also for policymakers, regarding the understanding of the pattern of recovery from the current and future recessions
Keywords: business cycle, Markov Switching models, recoveries, volatility
JEL Classification: C22, E32
Suggested Citation: Suggested Citation
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The Two Greatest. Great Recession vs. Great Moderation
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