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The Great Moderation: good luck, good policy, or less oil dependence?(ECONOMIC COMMENTARY)
- Article from:
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Economic Commentary (Cleveland)
- Article date:
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March 1, 2008
- Author:
- Pescatori, Andrea
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Copyright informationCOPYRIGHT 2008 Federal Reserve Bank of Cleveland. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Three explanations have been suggested for the moderation in real GDP and inflation that has occurred in industrialized countries since the 1980s: good luck, better monetary policy, and structural changes in the economy. Recent research finds that better monetary policy explains most of the moderation in inflation, and good luck and the less-intensive use of oil (a structural change) have played a major role in the moderation of GDP.
Sometime in the early 1980s, real GDP and inflation in industrialized countries began to fluctuate less widely than in the past. Economists have been debating the causes of this dramatic change, commonly referred to as the "Great Moderation," ...
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