C. Rich Higgins presented the third chapter of his dissertation which analyzes whether the Great Moderation in the United States was caused by “good luck” or “good policy” (or neither).  The abstract is below.

Abstract: A New Keynesian Model with Financial frictions is augmented with parameter drift and
stochastic volatility. This model is estimated and used to study the causes of the Great Moderation, a period of reduced macroeconomic volatility observed in the U.S. economy from 1984 to 2007. The model finds evidence of stochastic volatility and a decrease in financial frictions, but does not find support for changes in monetary policy. Based on counterfactual studies, the reduction in financial frictions was an important reason for the reduction in volatility observed during the Great Moderation.

The slides for the presentation are here.