NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Life Cycle of US Economic Expansions

Edward E. Leamer

NBER Working Paper No. 8192
Issued in March 2001
NBER Program(s):   EFG

Graphs that allow side by side comparisons of the six longer US expansions since 1950 suggest that these expansions have four distinct phases: (1) a high growth recovery during which the rate of unemployment declines to its pre-recession level, (2) a modest growth plateau during which the rate of unemployment is constant, (3) a growth spurt that drives unemployment down further and (4) a second plateau with modest growth and constant rate of unemployment. There have been only three expansions that have experienced the spurt and none has experienced a second spurt. These phases involve substantially different rates of GDP growth, but within each of these four phases GDP growth is largely unpredictable. Forecast accuracy thus comes mostly from understanding the transitions. This requires both data and economics. The economics takes the form of a predator/prey model of the cycle, where the prey are investment opportunities and the predators are entrepreneurs. A probit model of the transition into recession raises concerns about how much longer the aged Bush/Clinton expansion can last.

download in pdf format
   (523 K)

email paper

This paper is available as PDF (523 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w8192

Users who downloaded this paper also downloaded these:
Lee, Lee, and Mason w12379 Charting the Economic Life Cycle
Leamer and storper w8450 The Economic Geography of the Internet Age
Leamer w14221 What's a Recession, Anyway?
Bordo and Helbling w16103 International Business Cycle Synchronization in Historical Perspective
Leamer w13428 Housing IS the Business Cycle
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us