Noah Smith has an interesting piece in Bloomberg View: Big Economic Discovery! Booms Might Cause Busts:
Paul Beaudry and Franck Portier are two such researchers. They are famous for a 2006 theory saying that news about future changes in productivity could be what cause recessions and booms. That model never really caught on — it always had some issues with the data, and it definitely didn’t seem to be able to explain the Great Recession. But it inspired further research, and it was an interesting and novel idea.
Now, Beaudry and Portier, along with co-author Dana Galizia, are going after bigger fish. They want to resurrect the idea that booms cause recessions.
In a new paper called “Reviving the Limit Cycle View of Macroeconomic Fluctuations,” Beaudry and Portier try to think of reasons why booms might cause busts. The mechanism they come up with is pretty…
View original post 925 more words
Utopia, you are standing in it! 
Recent Comments