Economic fluctuations.

• Author: Hall, Robert E.
• Position: National Bureau of Economic Research Inc.'s Program on Economic Fluctuations

Economic Fluctuations

Robert E. Hall

The research activities of the NBER's Program on Economic Fluctuations are arranged through a number of small working groups as well as in individual projects. This report surveys the activities of the working groups and highlights several studies presented at the program's major research meetings.

Another important responsibility of the program is the preparation of the Bureau's business cycle chronology, a function carried out by the seven-member Business Cycle Dating Committee.

The 1990 Business Cycle Peak

The Business Cycle Dating Committee conferred twice in the past year. In December 1990, the committee reviewed the evidence on the decline in real activity in the U.S. economy starting during the previous summer. At that time, the committee concluded that the economy probably had reached a peak at some point in the summer, but there was insufficient evidence of a deep enough contraction to enter the peak into the NBER's chronology. In other words, the committee's opinion was that the economy probably was in a recession, but the evidence was not strong enough to make a definitive pronouncement.

Traditionally, the NBER has not made an announcement on a business cycle peak or trough until there was almost no doubt that the date would not be revised in the light of subsequent availability of data. A number of previous episodes have challenged the Bureau's dating process. In 1967, the economy paused dramatically during a period of otherwise strong growth. Many economists considered the period a recession. But the Bureau concluded that the depth of the decline of the economy was considerably less than its standard for a recession.

In 1973 and 1974, the economy stopped growing and real activity remained almost constant. In late 1974, real activity plunged and the economy entered what was then the most severe contraction since the Great Depression. The Bureau placed the peak of the cycle in November 1973, following the principle that once an episode is identified as a recession, the peak is when real activity reached its peak, even if the sharp plunge characteristic of a recession occurs many months later.

The recession of 1980 presented a rather different challenge. Real activity rebounded strongly from the trough in July 1980, but began contracting again in mid-1981. Was 1980 a separate recession, or was it part of the beginning of the severe recession of 1981-2?

The National Bureau of Economic Research is a private, nonprofit research organization founded in 1920 and devoted to objective quantitative analysis of the American economy. Its officers and board of directors are:

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John Herron Biggs Paul W. McCracken Andrew Brimmer Leo Melamed Carl F. Christ Michael H. Moskow George T. Conklin, Jr. James J. O'Leary

Kathleen B. Cooper Robert T. Parry Jean A. Crockett Peter G. Peterson George C. Eads Robert V. Roosa Morton Ehrlich Richard N. Rosett Martin Feldstein Bert Seidman George Hatsopoulos Eli Shapiro Lawrence R. Klein Donald S. Wasserman Franklin A. Lindsay

DIRECTORS BY UNIVERSITY APPOINTMENT

Jagdish W. Bhagwati, Columbia William C. Brainard, Yale Glen Cain, Wisconsin Franklin Fisher, Massachusetts Institute of Technology Jonathan R. T. Hughes, Northwestern Saul Hymans, Michigan Marjorie B. McElroy, Duke James L. Pierce, California, Berkeley Andrew Postlewaite, Pennsylvania Nathan Rosenberg, Stanford Harold Shapiro, Princeton Craig Swan, Minnesota Michael Yoshino, Harvard Arnold Zellner, Chicago

DIRECTORS BY APPOINTMENT OF OTHER ORGANIZATIONS

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