What explains the Great Moderation in the US? A structural analysis

This paper investigates what has caused output and inflation volatility to fall in the USusing a small scale structural model using Bayesian techniques and rolling samples. Thereare instabilities in the posterior of the parameters describing the private sector, the policyrule and the standard deviation of the shocks. Results are robust to the specification ofthe policy rule. Changes in the parameters describing the private sector are the largest,but those of the policy rule and the covariance matrix of the shocks explain the changes most.

On the sources of the Great Moderation

The remarkable decline in macroeconomic volatility experienced by the U.S. economy since the mid-80s (the so-called Great Moderation) has been accompanied by large changes in the patterns of comovements among output, hours and labor productivity. Those changes are reflected in both conditional and unconditional second moments as well as in the impulse responses to identified shocks. That evidencepoints to structural change, as opposed to just good luck, as an explanation for the Great Moderation. We use a simple macro model to suggest some of the immediate sources which are likely to be behindthe observed changes.

Do expectations matter? The Great Moderation revisited

We examine the role of expectations in the Great Moderation episode. We derive theoretical restrictions in a New-Keynesian model and test them using measures of expectations obtained from survey data, the Greenbook and bond markets. Expectations explain the dynamics of inflation and of interest rates but their importance is roughly unchanged over time. Systems with and without expectations display similar reduced form characteristics. Including or excluding expectations hardly changes the economic explanation of the Great Moderation. Results are robust to changes in the structure of the empirical model.

The Great Moderation and the Relationship between Output Growth and Its Volatility

This study examines the effect of the Great Moderation on the relationship between U.S. output growth and its volatility over the period 1947 to 2006. First, we consider the possible effects of structural change in the volatility process. In so doing, we employ GARCH-M and ARCH-M specifications of the process describing output growth rate and its volatility with and without a one-time structural break in volatility. Second, our data analyses and empirical results suggest no significant relationship between the output growth rate and its volatility, favoring the traditional wisdom of dichotomy in macroeconomics. Moreover, the evidence shows that the time-varying variance falls sharply or even disappears once we incorporate a one-time structural break in the unconditional variance of output starting 1982 or 1984. That is, the integrated GARCH effect proves spurious. Finally, a joint test of a trend change and a one-time shift in the volatility process finds that the one-time shift dominates.

Is the Great Moderation Ending? UK and US Evidence

The Great Moderation, the significant decline in the variability of economic activity, provides a most remarkable feature of the macroeconomic landscape in the last twenty years. A number of papers document the beginning of the Great Moderation in the US and the UK. In this paper, we use the Markov regime-switching models of Hamilton (1989) and Hamilton and Susmel (1994) to document the end of the Great Moderation. The Great Moderation in the US and the UK begin at different point in time. The explanations for the Great Moderation fall into generally three different categories -- good monetary policy, improved inventory management, or good luck. Summers (2005) argues that a combination of good monetary policy and better inventory management led to the Great Moderation. The end of the Great Moderation, however, occurs at approximately the same time in both the US and the UK. It seems unlikely that good monetary policy would turn into bad policy or that better inventory management would turn into worse management. Rather, the likely explanation comes from bad luck. Two likely culprits exist . energy-price and housing-price shocks.

The Great Moderation Flattens Fat Tails: Disappearing Leptokurtosis

Recently, Fagiolo et al. (2008) find fat tails of economic growth rates after adjusting outliers, autocorrelation and heteroskedasticity. This paper employs US quarterly real output growth, showing that this finding of fat tails may reflect the Great Moderation. That is, leptokurtosis disappears after GARCH adjustment once we incorporate the break in the variance equation.

The great diversification and its undoing

We investigate the hypothesis that macroeconomic fluctuations are primitively theresults of many microeconomic shocks, and show that it has significant explanatorypower for the evolution of macroeconomic volatility. We define ?fundamental? volatilityas the volatility that would arise from an economy made entirely of idiosyncratic microeconomicshocks, occurring primitively at the level of sectors or firms. In its empiricalconstruction, motivated by a simple model, the sales share of different sectors vary overtime (in a way we directly measure), while the volatility of those sectors remains constant.We find that fundamental volatility accounts for the swings in macroeconomicvolatility in the US and the other major world economies in the past half century. Itaccounts for the ?great moderation? and its undoing. Controlling for our measure offundamental volatility, there is no break in output volatility. The initial great moderationis due to a decreasing share of manufacturing between 1975 and 1985. The recentrise of macroeconomic volatility is due to the increase of the size of the financial sector.We provide a model to think quantitatively about the large comovement generated byidiosyncratic shocks. As the origin of aggregate shocks can be traced to identifiablemicroeconomic shocks, we may better understand the origins of aggregate fluctuations.

Gregory the Great

Gregory the Great was one of the four great fathers of the western Church, quickly rising from a monk, to a deacon, and eventually to the papal office (590-604). This book provides an introduction to the life and times of Gregory the Great. Particular attention is paid to his thinking and his writings including translations of his commentaries on translating the Bible, his sermons to the people, his reflections on the human condition, and, perhaps his most important work, his commentary on the Book of Job. A great addition to the series. 177p (The Early Church Fathers, Routledge 2005)

Structure of the tegument and ectocommensal microorganisms of Gyliauchen nahaensis (Digenea : Gyliauchenidae), an inhabitant of herbivorous fish of the Great Barrier Reef, Australia

The ultrastructure of the tegument and tegument-associated microorganisms of the gyliauchenid digenean Gyliauchen nahaensis is described by transmission and scanning electron microscopy. The tegument is devoid of surface spines and is characterized by a moderately folded apical membrane, abundant vesicles, basal mitochondria, a folded basal plasma membrane, and a thick basal matrix. Microorganisms form a dense biofilm on the tegument of the posterodorsal surface and the excretory papilla. At least 7 microbial morphotypes were identified, including eubacteria, spirochaetes, and nanobacteria.

Tetraphyllidean metacestodes of teleosts of the Great Barrier Reef, and the use of in vitro cultivation to identify them

The tetraphyllidean metacestode diversity of 310 teleost fishes, including 87 species from 31 families, was examined from Heron Island, The Great Barrier Reef, Australia. Eleven metacestode 'types' were identified with the use of light microscopy. Host-specificity varied greatly among metacestode types. Incorporation of in vitro cultivation allowed generic identification for some types. Types 1 and 2 belong to Uncibilocularis Southwell, 1925, and have triloculate bothridia and one pair of Forked hooks with unequal prongs; Type 3 has quadriloculate bothridia. Hook development was insufficient to determine in which genus, Acanthobothrium van Beneden, 1849 or Calliobothrium van Beneden, 1850, this type may belong. Type 4 has unilocular bothridia with simple edges and belongs to Anthobothrium van Beneden, 1850. Type 5 has multiloculated bothridia which are invaginated within pouches. This type belongs to the Rhinebothriinae although its generic identity cannot be determined. The bothridia of Type 5 everted within 24 hours of in vitro cultivation and revealed the presence of two forms, one having 48 loculi per bothridium, the other 72 per bothridium. In vitro studies provide additional support for existing theories of onchobothriid scolex development.