The Statistical Behavior of GDP after Financial Crises and Severe Recessions
Do severe recessions associated with financial crises cause permanent reductions in potential GDP? If the economy eventually returns to its trend, does the return take longer than the return following recessions not associated with financial crises? We develop a statistical methodology appropriate for identifying and analyzing slumps, episodes that combine a contraction and an expansion and end when the economy returns to its trend growth rate. We analyze the Great Depression for the United States, severe and milder financial crises for advanced economies, severe financial crises for emerging markets, and postwar recessions for the United States and other advanced economies. The preponderance of evidence for episodes comparable with the current U.S. slump is that, while potential GDP is eventually restored, the slumps last an average of nine years. If this historical pattern holds, the Great Recession that started in 2007:Q4 will not ultimately affect potential GDP, but the Great Slump is not yet half over.
Year of publication: |
2012
|
---|---|
Authors: | Papell David H. ; Ruxandra, Prodan |
Published in: |
The B.E. Journal of Macroeconomics. - De Gruyter, ISSN 1935-1690. - Vol. 12.2012, 3, p. 1-31
|
Publisher: |
De Gruyter |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
The Statistical Behavior of GDP after Financial Crises and Severe Recessions
Papell David H., (2012)
- More ...