Data Management

High-Growth Recoveries, Inventories And The Great Moderation

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Executive Summary

The authors present evidence about the loss of the so-called "Plucking effect", that is, a high-growth phase of the cycle typically observed at the end of recessions. This result matches the belief, presented informally by different authors, that recession may have now permanent effects, or recession have now an L shape versus old-time recessions that always had a V shape. The authors also show that the loss of the "Plucking effect" can explain part of the Great Moderation. They postulate that these two phenomena may be due to changes in inventory management brought about by improvements in information and communications technologies.

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