The procyclical behavior of prices has been a staple of business cycle lore since the work of the early NBER business cycle researchers. This paper reexamines that empirical fact. The aggregate data do not support procyclical price movements as a stable feature of the business cycle. The only episode where it is a robust feature of the data is the period between the two world wars, particularly the period of the Great Depression.
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Cooley et al. (1991) studied this question.
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