Series: Working Papers. 1423.
Author: María Dolores Gadea-Rivas, Ana Gómez-Loscos and Gabriel Pérez-Quirós.
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Abstract
Many have argued that the Great Recession of 2008 marked the end of the Great Moderation of the eighties and nineties. Through painstaking empirical analysis of the data, this paper shows this is not the case. Output volatility remains subdued despite the turmoil created by the Great Recession. This finding has important implications for policymaking since lower output volatility (the hallmark of the Great Moderation) is associated with weaker recoveries.