Economists generally agree that the 1970s, the period of highest volatility in both output and inflation, was also a period in which monetary  1  Kim and Nelson (1999) and McConnell and Perez-Quiros (2000) were among the first to note the reduction in the volatility of output.
Kim, Nelson, and Piger (2003) show that the reduction in the volatility of output is quite broad based, affecting many sectors and aspects of the economy. Warnock and Warnock (2000) find a parallel decline in the volatility of employment, especially in goods-producing sectors.