In standard models, economic activity fluctuates symmetrically around a "natural rate" and stabilization policies can dampen these fluctuations but do not affect the average level of activity. An alternative view--labeled the "plucking model" by Milton Friedman--is that economic fluctuations are...

In the presence of economies of scale in the investment technology, trade openness may have non-conventional effects on the level of investment, its cyclical behavior, and the volatility of the terms of trade. Trade openness may lead to boom-bust cycles of investment supported by self-fulfilling...

We argue that falling farm product prices, incomes, and spending may explain 10-30 percent of the 1930 U.S. output decline. Crop prices collapsed, reducing farmers' incomes. And across U.S. states and Ohio counties, auto sales fell most in crop-growing areas. The large spending response may be...

The NBER's pre-WWI chronology of annual peaks and troughs has the remarkable implication that the U.S. economy spent nearly every other year in recession, although previous research has argued that the post-Civil War dates are flawed. This paper extends that research by redating annual peaks and...

Using the recession recovery point equal to the month when private payrolls first exceeded their previous peak level, this paper argues that it was the negative secular trend in manufacturing jobs that was the most important determinant of the length and depth of the last three...

In 1936-37, the Federal Reserve doubled the reserve requirements imposed on member banks. Ever since, the question of whether the doubling of reserve requirements increased reserve demand and produced a contraction of money and credit, and thereby helped to cause the recession of 1937-1938, has...