Boom, bust, and misery : the curse of capitalism -- History of the roller coaster -- How unstable is the American economy? -- The income gap -- The consumption gap -- The housing crisis -- Investment and profit -- The credit balloon and the financial crisis -- Government spending and taxes --...

This paper reconsiders the role of macroeconomic shocks and policies in determining the Great Recession and the subsequent recovery in the US. The Great Recession was mainly caused by a large demand shock and by the ZLB on the interest rate policy. In contrast with previous findings, the...