Recent Changes in the U.S. Business Cycle

Posted: 4 May 2001

See all articles by Marcelle Chauvet

Marcelle Chauvet

University of California Riverside

Simon Potter

Federal Reserve Bank of New York

Multiple version iconThere are 3 versions of this paper


The US business cycle expansion that started in March 1991 is the longest on record. This paper uses statistical techniques to examine whether this expansion is a onetime unique event or whether its length is a result of a change in the stability of the US economy. Bayesian methods are used to estimate a common factor model that allows for structural breaks in the dynamics of a wide range of macroeconomic variables. We find strong evidence that a reduction in volatility is common to the series examined. Further, the reduction in volatility implies that future expansions will be considerably longer than the historical average.

Keywords: Recession, Common Factor, Business Cycle, Bayesian Methods.

JEL Classification: E52, C53

Suggested Citation

Chauvet, Marcelle and Potter, Simon, Recent Changes in the U.S. Business Cycle. The Manchester School, Forthcoming. Available at SSRN:

Marcelle Chauvet (Contact Author)

University of California Riverside ( email )

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Simon Potter

Federal Reserve Bank of New York ( email )

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