http://economix.blogs.nytimes.com/2014/04/11/the-great-moderation-is-back/?_php=true&_type=blogs&module=BlogPost-ReadMore&version=Blog%20Main&action=Click&contentCollection=Business%20Day&pgtype=Blogs®ion=Body&_r=0#more-173575
The Great Moderation was a term used to describe the period in the 1980s when the economy was in a period of relatively steady growth.
With the economic recession still fresh in our minds, very few would relate our current times to the Great Moderation. However, Jason Furman, the head of the President's Council of Economic Advisers argued that the Great Moderation is currently in progress.
He argues that over the last five years, there has been a pattern of steady growth, even the great recession does not alter this, as he states that economic volatility is still lower on average compared to earlier decades.
I believe we will continue to see steady economic growth as long as the federal reserve keeps the interest rate relatively low. Also if the federal reserve tries to continually increase investment, by giving credit tax breaks, the economy can not go anywhere but up. Government needs to keep taxes and government spending constant and policy changes need to help increase investment of capital to allow economic growth. In the Cobb Douglas production function we learned in class alpha or the technological advances that increase production are found by having high levels of investment for research and development.
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