". There is simply no denying that all hell broke loose
in the American economy between 1920 and 1940......"
in the American economy between 1920 and 1940......"
yet comparing
"... the pre-World War I and post-World War II eras:
The postwar era has not been dramatically more stable than the prewar era."
chrissy Romer
"The most likely source of both the continuity and the change in economic
fluctuations is the rise of macroeconomic policy after World War II.
In the post-World War II period, macroeconomic policy and related reforms
have eliminated or dampened many of the shocks that caused recessions in the past,
and thus brought about longer expansions and fewer severe recessions.
But postwar macropolicy has introduced other shocks.
It is the rise of policy-induced recessions undertaken to reduce inflation
in the postwar era that explains the essential similarity of cyclical severity and volatility
over time
. In short, it is the fact that we have replaced uncontrolled random shocks
from a wide variety of sources with controlled policy shocks
that explains the changes we do and do not see in fluctuations over time."
CR
