The U.S. economy has experienced a reduction in volatility since the mid-1980s. In this paper we investigate the changes in the response of the economy to an oil price shock and the role of the systematic monetary policy response in accounting for …
Explanations for the decline in U.S. output volatility since the mid-1980s include: 'better policy,' 'good luck,' and technological change. Our multiple-break estimates suggest that reductions in volatility since the mid-1980s extend not only to …