View article

Kim and Nelson (1999), McConnell and Perez-Quiros (2000), Blanchard and Simon (2001), Stock and Watson (2002), and Boivin and Giannoni (2003), among others, have documented a significant decline in aggregate volatility in the United States and other OECD economies. There is no consensus, however, on the causes of this decline, so many questions regardingits implications and welfare consequences remain unanswered.