Keywords: GDP growth volatility, structural changes, Great Moderation, economic influence, US economy, USA, United States, economic stability, low output volatility, gross domestic product
The Great Moderation in the USA and across the world
The collapse of the subprime mortgages market in August 2007 triggered the financial crises in the USA causing the first global recession since the World War II. The decades preceding this recession were a period of unusually mild volatility in the US economy. Lower output volatility over these decades is detected in a number of developed and developing countries, suggesting that a reduction in volatility in this period was a more general phenomenon. In this paper, we assess the hypothesised explanation according to which the exceptional stability of the US economy is the source of relatively low output volatility in other national economies. The results of the time series analysis of 97 developed and developing countries over the period 1961–2007 suggest that low output volatility in the USA is not the main source of low output volatility across the world in this period.