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The Great Moderation refers to the fall in U.S. output growth volatility in the mid-1980s. At the same time, the United States experienced a moderation in inflation and lower average inflation. Using annual data since 1890, the authors find that an earlier, 1946 moderation in output and consumption growth was comparable to that of 1984. Using quarterly data since 1947, they also isolate the 1969 - 1983 Great Inflation to refine the asset pricing implications of the moderations. Asset pricing theory predicts that moderations - real or nominal - influence interest rates.
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