Behavior and Business Fluctuations THE enigmatic behavior of the U.S. economy during the 1980 recession makes it more imperative than ever that some of the mystery that surrounds inventory behavior be solved. On the surface, the economy seems to have reacted quite differently to what appear to be rather similar external shocks (principally, rapid increases in oil prices) in 1973-75 and in 1979-80. However, if one abstracts from inventory behavior and focuses on final sales, the two recessions look rather similar. Several observations confirm this. First, the briefest recession in U.S. history was also the first in which inventory investment did not swing sharply toward liquidation between the peak and the trough. Second, if one judges the contraction by real final sales instead of real GNP, the 1980 recession was actually far deeper than the "severe" 1973-75 recession.1 And third, the way the 1980 recession was concentrated into a single quarter seems less unusual if one looks at real final sales instead of real GNP. In the 1973-75 reces-I thank Danny Quah for exceptional research assistance. I also thank Gregory Mankiw and Leonard Nakamura for research assistance and Stephenie Sigall and Phyllis Durepos for quickly and efficiently typing the paper. I am grateful to members of the Brookings panel and to a number of colleagues for helpful discussions on this research. I apologize to those I leave out when I mention Angus S. Deaton,
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