CFDP 2260

Analysis of Nine U.S. Recessions and Three Expansions


Publication Date: October 2020

Pages: 42


Nine U.S. recessions and three expansions are analyzed in this paper using a structural macroeconometric model. With two exceptions and one partial exception, the episodes are predicted well by the model, including the 2008-2009 recession, conditional on the actual values of the exogenous variables. The main exogenous variables are stock prices, housing prices, import prices, exports, and exogenous government policy variables. Monetary policy is endogenous. Fluctuations in stock and housing prices (housing prices after 1995) are important drivers of output fluctuations—large wealth effects on household expenditures.

Keywords: Business cycles, Recessions, Expansions

JEL Classification Codes: E1, E3

JEL Classification Codes: E01E03

See CFDP Version(s): CFDP 2260R
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