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Policy Effects in the Post Boom U.S. Economy

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Abstract

The paper analyzes the question why the U.S. economy in the 2000:4-2004:3 period was sluggish in light of the large expansionary fiscal and monetary policies that took place. The answer does not appear to be that there were large structural changes in the economy or systematic bad shocks. This paper tests for such changes and shocks, and the results are generally negative. Instead, the main culprits seem to be large negative effects from declines in the stock market and exports. Although not tested in this paper, some of the decline in exports may be the result of the stock market decline, in which case most of the explanation is simply the stock market decline itself.

Suggested Citation

  • Ray C. Fair, 2005. "Policy Effects in the Post Boom U.S. Economy," Cowles Foundation Discussion Papers 1497, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:1497
    Note: CFP 1193
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    References listed on IDEAS

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    1. D. W. K. Andrews, 2003. "End-of-Sample Instability Tests," Econometrica, Econometric Society, vol. 71(6), pages 1661-1694, November.
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    Cited by:

    1. Fair, Ray C., 2012. "Has macro progressed?," Journal of Macroeconomics, Elsevier, vol. 34(1), pages 2-10.
    2. Ray C. Fair, 2020. "Analysis of Nine U.S. Recessions and Three Expansions," Cowles Foundation Discussion Papers 2260, Cowles Foundation for Research in Economics, Yale University.
    3. Ray C. Fair, 2020. "Analysis of Nine U.S. Recessions and Three Expansions," Cowles Foundation Discussion Papers 2260R, Cowles Foundation for Research in Economics, Yale University, revised Jan 2021.
    4. Ray C. Fair, 2018. "Explaining the slow U.S. recovery: 2010–2017," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 53(4), pages 184-194, October.
    5. Laurence Seidman, 2006. "Learning About Bernanke," Challenge, Taylor & Francis Journals, vol. 49(5), pages 19-32.
    6. Lewis, Kenneth A. & Seidman, Laurence S., 2008. "Overcoming the zero interest-rate bound: A quantitative prescription," Journal of Policy Modeling, Elsevier, vol. 30(5), pages 751-760.
    7. Ray Fair, 2009. "Analyzing Macroeconomic Forecastability," Yale School of Management Working Papers amz2443, Yale School of Management, revised 01 Oct 2009.

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    More about this item

    Keywords

    Fiscal policy; Monetary policy;

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General

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