TY  - JOUR
AU  - Gali,Jordi
AU  - Gambetti,Luca
TI  - On the Sources of the Great Moderation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14171
PY  - 2008
Y2  - July 2008
UR  - http://www.nber.org/papers/w14171
L1  - http://www.nber.org/papers/w14171.pdf
N1  - Author contact info:
Jordi Gali
Centre de Recerca en Economia Internacional (CREI)
Ramon Trias Fargas 25
08005 Barcelona
SPAIN
Tel: 011-34-93-5422754
Fax: 011-34-93-5421860
E-Mail: jgali@crei.cat

Luca Gambetti
Departament d'Economia
Universitat Autònoma de Barcelona
08193 Bellaterra (Barcelona) Spain
E-Mail: luca.gambetti@uab.cat
AB  - The remarkable decline in macroeconomic volatility experienced by the U.S. economy since the mid-80s (the so-called Great Moderation) has been accompanied by large changes in the patterns of comovements among output, hours and labor productivity. Those changes are reflected in both conditional and unconditional second moments as well as in the impulse responses to identified shocks. Among other changes, our findings point to (i) an increase in the volatility of hours relative to output, (ii) a shrinking contribution of non-technology shocks to output volatility, and (iii) a change in the cyclical response of labor productivity to those shocks. That evidence suggests a more complex picture than that associated with  "good luck" explanations of the Great Moderation.
ER  -