DP6600 Explaining The Great Moderation: It Is Not The Shocks

Author(s):	Domenico Giannone, Michele Lenza, Lucrezia Reichlin
Publication Date:	December 2007
Keyword(s):	Great Moderation, Information, Shocks
JEL(s):	C32, C53, E32, E37
Programme Areas:	International Macroeconomics
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=6600

This paper shows that the explanation of the decline in the volatility of GDP growth since the mid-eighties is not the decline in the volatility of exogenous shocks but rather a change in their propagation mechanism.