Forecasts of Economic Activity in the Great Recession

Abstract Using a representative longitudinal survey of U.S. households, we find that household income became noticeably more volatile between the early 1970s and the late 2000s despite the moderation seen in aggregate economic activity during this period. We estimate that the standard deviation of percent changes in household income rose about 30 percent between 1971 and 2008. This widening in the distribution of percent changes was concentrated in the tails. The share of households experiencing a 50 percent plunge in income over a two-year period climbed from about 7 percent in the early 1970s to more than 12 percent in the early 2000s before retreating to 10 percent in the run-up to the Great Recession. Households’ labor earnings and transfer payments have both become more volatile over time. As best we can tell, the rise in the volatility of men’s earnings appears to owe both to greater volatility in earnings per hour and in hours worked.

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Real-Time Real Economic Activity: Exiting the Great Recession and Entering the Pandemic Recession

10.3386/w27482 ◽

2020 ◽

Cited By ~ 1

Author(s):

Francis Diebold

Keyword(s):

Real Time ◽

Great Recession ◽

Economic Activity ◽

The Great Recession

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Understanding the Great Recession

American Economic Journal Macroeconomics ◽

10.1257/mac.20140104 ◽

2015 ◽

Vol 7 (1) ◽

pp. 110-167 ◽

Cited By ~ 81

Author(s):

Lawrence J. Christiano ◽

Martin S. Eichenbaum ◽

Mathias Trabandt

Keyword(s):

Great Recession ◽

Economic Activity ◽

New Keynesian ◽

Factor Productivity ◽

Working Capital ◽

The Great Recession ◽

Keynesian Model ◽

Price Rigidities ◽

The Cost ◽

Joint Behavior

We argue that the vast bulk of movements in aggregate real economic activity during the Great Recession were due to financial frictions. We reach this conclusion by looking through the lens of an estimated New Keynesian model in which firms face moderate degrees of price rigidities, no nominal rigidities in wages, and a binding zero lower bound constraint on the nominal interest rate. Our model does a good job of accounting for the joint behavior of labor and goods markets, as well as inflation, during the Great Recession. According to the model the observed fall in total factor productivity and the rise in the cost of working capital played critical roles in accounting for the small drop in inflation that occurred during the Great Recession. (JEL E12, E23, E24, E31, E32, E52)

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The housing market-bank credit relationship: Some thoughts on its causality

Panoeconomicus ◽

10.2298/pan1402145a ◽

2014 ◽

Vol 61 (2) ◽

pp. 145-160 ◽

Cited By ~ 1

Author(s):

Philip Arestis ◽

Ana González

Keyword(s):

Great Recession ◽

Economic Activity ◽

Economic Thought ◽

Bank Credit ◽

Demand For Money ◽

The Great Recession ◽

Developed Economies ◽

Endogenous Money ◽

Housing Bubbles ◽

Development Of Economic Theory

The dominance of the orthodox paradigm over the last decades prior to the ?great recession? left no room for the notion of ?endogenous money? in the development of economic theory. However, this alternative direction of the causality of demand for money-credit and economic activity has been present in the heterodox economic thought since the 1930s and should be reconsidered in the current situation. In this context, the numerous episodes of housing bubbles, which have been taking place since 2007, create the perfect ?environment? to explore the notion of ?dynamic monetized production economy?. Our theoretical framework is estimated econometrically by using a sample of 6 developed economies which spans from 1970 to 2011. The non-stationary ?nature? of our data recommends the use of cointegration techniques (S?ren Johansen 1995) in order to estimate our models.

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VALIDATING CHINA'S OUTPUT DATA USING SATELLITE OBSERVATIONS

Macroeconomic Dynamics ◽

10.1017/s1365100518000056 ◽

2018 ◽

Vol 23 (8) ◽

pp. 3327-3354 ◽

Cited By ~ 1

Author(s):

Stephen D. Morris ◽

Junjie Zhang

Keyword(s):

Gross Domestic Product ◽

Nitrogen Dioxide ◽

Great Recession ◽

Economic Activity ◽

National Level ◽

Satellite Observations ◽

Dynamic Panel ◽

Output Data ◽

The Great Recession ◽

Recession Period

Can officially reported output figures be externally validated? This paper presents a dynamic panel framework for assessing statistics using verifiable signals of economic activity. In this context, satellite readings of nitrogen dioxide, a byproduct of combustion, are forwarded. The problem of validating China's reported gross domestic product at the sub-national level during two recent downturns is considered. During the Great Recession period, reported figures are validated for some regions, but not others, including specifically those known to be inaccurate.

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Inflation in the Great Recession and New Keynesian Models

American Economic Journal Macroeconomics ◽

10.1257/mac.20140097 ◽

2015 ◽

Vol 7 (1) ◽

pp. 168-196 ◽

Cited By ~ 54

Author(s):

Marco Del Negro ◽

Marc P. Giannoni ◽

Frank Schorfheide

Keyword(s):

Monetary Policy ◽

Great Recession ◽

Economic Activity ◽

Financial Frictions ◽

New Keynesian ◽

Dsge Models ◽

Dsge Model ◽

Macroeconomic Variables ◽

The Great Recession ◽

New Keynesian Models

Several prominent economists have argued that existing DSGE models cannot properly account for the evolution of key macroeconomic variables during and following the recent Great Recession. We challenge this argument by showing that a standard DSGE model with financial frictions available prior to the recent crisis successfully predicts a sharp contraction in economic activity along with a protracted but relatively modest decline in inflation, following the rise in financial stress in 2008:IV. The model does so even though inflation remains very dependent on the evolution of economic activity and of monetary policy. (JEL E12, E31, E32, E37, E44, E52, G01)

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