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"Analysis of Nine U.S. Recessions and Three Expansions," January 2022, in progress.

Paper: pdf file

Nine U.S. recessions and three expansions are analyzed in this paper using a structural macroeconometric model. With two exceptions and one partial exception, the episodes are predicted well by the model, including the 2008-2009 recession, conditional on the actual values of the exogenous variables. The main exogenous variables are stock prices, housing prices, import prices, exports, and exogenous government policy variables. Monetary policy is endogenous. Fluctuations in stock and housing prices (housing prices after 1995) are important drivers of output fluctuations---large wealth effects on household expenditures. In explaining the 2008-2009 recession detailed financial variables such as credit-constraint variables are not needed for the aggregate predictions. The sluggish recovery after the 2008-2009 recession is explained in large part by sluggish government spending. There is no evidence of secular stagnation.


The results in this paper are consisent with those in some of my past papers. The results for E1996 are consistent with those in 2004#1. For R2001 those in 2005#3. For R2008 those in 2017#2. For E2001 those in 2018#2.