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2 - Trends and Cycles, Shocks and Stability

Published online by Cambridge University Press:  28 March 2024

Jeremy B. Rudd
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Summary

The chapter examines how to decompose macroeconomic data into trend and cyclical components, and whether doing so is innocuous. The nature of business cycles is examined; specifically, whether a shock-propagation or regime-switching framework is more useful for understanding economic fluctuations. The chapter also discusses whether the economy has self-correcting tendencies that cause it to return to full employment following a recession.

Keywords

business cyclesseasonal cycleseconomic fluctuationsstatistical filters
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Chapter
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A Practical Guide to Macroeconomics , pp. 18 - 45
Publisher: Cambridge University Press
Print publication year: 2024

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