Has the Business Cycle Changed and Why?
The Business Cycle Has Changed in Important Ways over the Past Four Decades: Output Fluctuations Have Moderated, Gdp Growth Is Easier to Forecast, and Shocks...
The business cycle has changed in important ways over the past four decades: output fluctuations have moderated, GDP growth is easier to forecast, and shocks to GDP are more persistent. Curiously, one thing that has not changed is the degree of synchronization of business cycles among the G7.
What happened to the business cycle after 1984?
But after 1984, labor productivity became nearly acyclical. (See Figure 1.) In other words, it no longer moved in concert with the business cycle. At the same time, labor productivity switched from comoving positively with hours worked before 1984 to comoving negatively with hours worked after 1984.
Why does the business cycle fluctuate?
Every nation's economy fluctuates between periods of expansion and contraction. These changes are caused by levels of employment, productivity, and the total demand for and supply of the nation's goods and services. In the short-run, these changes lead to periods of expansion and recession.
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