TY  - JOUR
AU  - Long,J. Bradford De
AU  - Summers,Lawrence H.
TI  - The Changing Cyclical Variability of Economic Activity in the United States
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1450
PY  - 1986
Y2  - November 1986
UR  - http://www.nber.org/papers/w1450
L1  - http://www.nber.org/papers/w1450.pdf
N1  - Author contact info:
J. Bradford DeLong
Department of Economics
601 Evans Hall
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510/643-4027
Fax: 510/642-6615
E-Mail: delong@econ.berkeley.edu

Lawrence H. Summers
Harvard Kennedy School of Government
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-9322
Fax: 617/495-0436
E-Mail: lhs@harvard.edu
M1  - published as J. Bradford DeLong, Lawrence H. Summers. "The Changing Cyclical Variability of Economic Activity in the United States," in Robert J. Gordon, ed., "The American Business Cycle: Continuity and Change" University of Chicago Press (1986)

AB  - This paper examines the changing cyclical variability of economic activity in the United States. It first shows that the decline in variability since World War II cannot be explained by changes in the composition of economic activity or by the avoidance of financial panics. We then show that increased automatic stabilization by the government, and the increased availability of private credit after World War II combined to stabilize consumption and reduce the variability of aggregate demand. The main argument of the paper holds that greater price rigidity in recent times may have contributed to economic stability by preventing destabilizing deflations and inflations. Empirical evidence is presented to support this proposition.
ER  -