TY  - JOUR
AU  - Taylor,John B.
TI  - Improvements in Macroeconomic Stability:  The Role of Wages and Prices
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1491
PY  - 1988
Y2  - March 1988
UR  - http://www.nber.org/papers/w1491
L1  - http://www.nber.org/papers/w1491.pdf
N1  - Author contact info:
John B. Taylor
Herbert Hoover Memorial Building
Stanford University
Stanford, CA 94305-6010
Tel: 650/723-9677
Fax: 650-723-1687
E-Mail: John.Taylor@stanford.edu
M1  - published as John B. Taylor. "Improvements in Macroeconomic Stability: The Role of Wages and Prices," in Robert J. Gordon, ed., "The American Business Cycle: Continuity and Change" University of Chicago Press (1986)

AB  - This paper compares macroeconomic performance in the United States from 1891 through 1914 with the period after the Second World War by estimating reduced form autoregressions for prices, wages and output, by looking at their moving average representations, and by giving them simple structural interpretations. The results show that the impulses to the economic system were smaller in the later period, but the propagation mechanisms are much slower and more drawn out. The smaller shocks are therefore translated into larger and more prolonged fluctuations in output and inflation than would occur if the earlier dynamics were applicable in the later period. A tentative explanation for the changes in the dynamics is a slower speed of wage and price adjustment combined with a different accommodative stance for the monetary system.
ER  -