Abstract
According to the conventional view of the business cycle, fluctuations in output represent temporary deviations from trend. The purpose of this paper is to question this conventional view. If fluctuations in output are dominated by temporary deviations from the natural rate of output, then an unexpected change in output today should not substantially change one's forecast of output in, say, five or ten years. Our examination of quarterly postwar United States data leads us to be skeptical about this implication. The data suggest that an unexpected change in real GNP of 1 percent should change one's forecast by over 1 percent over a long horizon.
Keywords
EconomicsBusiness cycleEconometricsPotential outputKeynesian economicsMonetary economicsMonetary policy
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Publication Info
- Year
- 1987
- Type
- article
- Volume
- 102
- Issue
- 4
- Pages
- 857-857
- Citations
- 778
- Access
- Closed
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Cite This
John Y. Campbell,
N. Gregory Mankiw
(1987).
Are Output Fluctuations Transitory?.
The Quarterly Journal of Economics
, 102
(4)
, 857-857.
https://doi.org/10.2307/1884285
Identifiers
- DOI
- 10.2307/1884285