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What are the principal reasons for the change

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Question: Older business cycle theories used to focus on what was called the ‘‘interaction of the multiplier and the accelerator'' to produce endogenous business cycles; the accelerator said that investment was proportional to the change in output. Under reasonable empirical estimates of the underlying parameters, such a model could be shown to generate business cycles once every four to five years. Considering that the US economy has had only two minor recessions since 1982, which do you think has changed more - the multiplier or the accelerator? What are the principal reasons for that change?

Reference no: EM131737749

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