Tuesday, December 02, 2008

GDP fluctuations

I came across this graph of historical GDP. It looks like prior to 1983, the GDP could be counted on to fluctuate wildly. Does anyone have an explanation or theory as to why it hasn't fluctuated as much since 1983?


Scooter said...

Two thoughts: Tax cuts of the eighties and aughts (and only moderate intreases under 41 and 42)and the widespread use of computers since the 90s increasing productivity.

Stephanie said...

How would the tax cuts yield less fluctuation? I mean, I would get it if they yielded either higher or lower GDP, but I don't get how they would modulate the fluctuations.

I like the computer theory better, although I think it looks like the stability starts a bit before the computer explosion. Hard to tell, and it's hard for me to remember when computers became widespread. (I guess they were well on the upswing by 1982 when I started college and had programming classes and used them for word processing.)

Scooter said...

Just think tax cuts made the biz climate better and started the GDP path on a more generally upward path though that is not what the chart was documenting.

I agree that the computer got its start much earlier. I was punching those cards and using word processing in the early 80s, too. But they got much more ubiquitous and user-friendly starting in the 90s.

Stephanie said...

Punch cards were a thing of the past by 1982. We were programming in Fortran and Pascal and Basic. The good ol days. Haven't attempted to learn C or any current languages.

I'm concurring that the timing of the computers pretty well matches the modulation of the GDP fluctuations.

Scooter said...

Now that I think of it...my BASIC class (punch cards) was in 80 or 81. The lines were so long at the UT biz school computer I had to get up at 3:00 AM to go run my program.