scholarly journals Why Has the U.S. Economy Stagnated Since the Great Recession?

2020 ◽  
pp. 1-46 ◽  
Author(s):  
Yunjong Eo ◽  
James Morley
Keyword(s):  
Great Recession ◽  
Switching Time ◽  
Output Growth ◽  
Output Gap ◽  
The Great Recession ◽  
Real Gdp ◽  
Different Types ◽  
Negative Output ◽  
Do So ◽  
Trend Growth

Since the Great Recession in 2007-09, U.S. real GDP has failed to return to its previously projected path, a phenomenon widely associated with secular stagnation. We investigate whether this stagnation was due to hysteresis effects from the Great Recession, a persistent negative output gap following the recession, or slower trend growth for other reasons. To do so, we develop a new Markov-switching time series model of output growth that accommodates two different types of recessions, those which permanently alter the level of real GDP and those with only temporary effects. We also account for structural change in trend growth. Estimates from our model suggest that the Great Recession generated a large persistent negative output gap rather than any substantial hysteresis effects, with the economy eventually recovering to a lower trend path which appears to be due to a reduction in productivity growth that began prior to the onset of the Great Recession.

scholarly journals Estimating the Output Gap for Saudi Arabia

2017 ◽  
Vol 9 (3) ◽  
pp. 81 ◽  
Author(s):  
Ryadh M. Alkhareif ◽  
William A. Barnett ◽  
Nayef A. Alsadoun
Keyword(s):  
Output Growth ◽  
Total Output ◽  
Output Gap ◽  
Potential Output ◽  
Real Gdp ◽  
Advanced Economies ◽  
Production Function Approach ◽  
Potential Gdp ◽  
The Difference ◽  
Potential Output Growth

The objective of this paper is to estimate annual potential output growth and the output gap for the Saudi economy over the period 1980 to 2015, looking at both total output and non-oil output. The focus on the latter is so that the progress in diversifying the economy might be examined and the possible impact of diversification on potential output might be measured. We use three methods for estimating potential output proposed in the macroeconomic literature. The methodologies include the Hodrick-Prescott filter, Kalman filter, and the production function approach. We compare the three over the entire sample and the last five years. Our findings suggest that the output gap (the difference between actual and potential output, as measured by real GDP) is positive on average over the entire period (i.e., actual output has on average exceeded potential); however, the gap has turned negative and has shrunk in recent years, as fiscal expenditures, particularly in infrastructure, have acted to better align actual and potential. Our analysis also indicated that growth in both potential GDP and total factor productivity have accelerated in the 2011-2015 period. In contrast, growth in these factors has slowed in many other countries, particularly the advanced economies. This better performance of the Saudi economy is possibly due to the development of a resilient financial sector in the Saudi economy.

scholarly journals Resilience, Agency and Coping with Hardship: Evidence from Europe during the Great Recession

2018 ◽  
Vol 48 (03) ◽  
pp. 547-567 ◽  
Author(s):  
HULYA DAGDEVIREN ◽  
MATTHEW DONOGHUE
Keyword(s):  
Great Recession ◽  
Coping Mechanisms ◽  
European Countries ◽  
Primary Data ◽  
Structural Constraints ◽  
The Great Recession ◽  
Key Informant ◽  
Different Types ◽  
And Coping ◽  
Household Responses

AbstractThis paper aims to contribute to the growing literature on resilience by focusing on coping with hardship during the Great Recession, drawing upon primary data gathered through household and key informant interviews in nine European countries. As the resilience approach highlights agency, the paper examines the nature of household responses to hardship during this period on the basis of the ‘structure-agency problem’. An important contribution of this paper is to identify different forms of agency and discuss their implications. More specifically, we conceptualise three different types of agency in coping with hardship: absorptive, adaptive and transformative. Analysis of the findings indicates that structural constraints remain prominent. Most coping mechanisms fall under the category of absorptive and adaptive agency characterised here as burden-bearing actions that ‘conform’ to changing circumstances rather than shaping those circumstances.

scholarly journals Why Does the Economy Fall to Pieces after a Financial Crisis?

2010 ◽  
Vol 24 (4) ◽  
pp. 3-20 ◽  
Author(s):  
Robert E Hall
Keyword(s):  
United States ◽  
Financial Crisis ◽  
Great Recession ◽  
Financial Frictions ◽  
The United States ◽  
The Great Recession ◽  
The Great Depression ◽  
Real Gdp ◽  
History Of ◽  
Low Levels

The worst financial crisis in the history of the United States and many other countries started in 1929. The Great Depression followed. The second-worst struck in the fall of 2008 and the Great Recession followed. Commentators have dwelt endlessly on the causes of these and other deep financial collapses. This article pursues modern answers to a different question: why does output and employment collapse after a financial crisis and remain at low levels for several or many years after the crisis. It focuses on events in the United States since 2008. Existing macroeconomic models account successfully for the immediate effects of a financial crisis on output and employment. I will lay out a simple macro model that captures the most important features of modern models and show that realistic increases in financial frictions that occurred in the crisis of late 2008 will generate declines in real GDP and employment of the magnitude that occurred. But this model cannot explain why GDP and employment failed to recover once the financial crisis subsided—the model implies a recovery as soon as financial frictions return to normal. At the end of the article, I will mention some ideas that are in play to explain the persistent adverse effects of temporary crises, but have yet to be incorporated into the mainstream model.

scholarly journals Fiscal Policy and the Great Recession in the Euro Area

2012 ◽  
Vol 102 (3) ◽  
pp. 71-76 ◽  
Author(s):  
Günter Coenen ◽  
Roland Straub ◽  
Mathias Trabandt
Keyword(s):  
Time Series ◽  
Fiscal Policy ◽  
Euro Area ◽  
Great Recession ◽  
Gdp Growth ◽  
Extended Version ◽  
The Great Recession ◽  
European Central ◽  
Real Gdp ◽  
Percentage Points

How much did fiscal policy contribute to euro area real GDP growth during the Great Recession? We estimate that discretionary fiscal measures have increased annualized quarterly real GDP growth during the crisis by up to 1.6 percentage points. We obtain our result by using an extended version of the European Central Bank's New Area-Wide Model with a rich specification of the fiscal sector. A detailed modeling of the fiscal sector and the incorporation of as many as eight fiscal time series appear pivotal for our result.

The Quality of Democracy

2020 ◽  
pp. 296-312
Author(s):  
Joan Font
Keyword(s):  
Great Recession ◽  
Political Equality ◽  
Quality Of Democracy ◽  
The Great Recession ◽  
Trade Offs ◽  
Participatory Institutions ◽  
Different Types ◽  
Main Components ◽  
Definition Of

This chapter discusses the quality of Spanish democracy. Lacking a widely accepted definition of the concept of the quality of democracy, it reviews three types of evidence: the existing comparative measurements, citizens’ own definitions of democracy, and a normative definition of the concept, according to which the quality of democracy is different from democracy itself and consists of two main components: voice and political equality. Using different types of evidence from the national, regional, and local government levels, and from the institutional and civil society sides, the performance and trade-offs between these two components are examined. The effect of participatory institutions and of the Great Recession on the quality of democracy is reviewed. The chapter makes clear that the choice of different definitions of the concept leads to quite diverse assessments of its situation.

scholarly journals THE REGIME-SWITCHING VOLATILITY OF EURO AREA BUSINESS CYCLES

2017 ◽  
Vol 22 (2) ◽  
pp. 426-469 ◽  
Author(s):  
Stéphane Lhuissier
Keyword(s):  
Business Cycles ◽  
Euro Area ◽  
Great Recession ◽  
Time Variation ◽  
Regime Switching ◽  
Technology Shocks ◽  
The Great Recession ◽  
Structural Disturbance ◽  
Different Types ◽  
High Volatility

We document the strong evidence of time variation in the volatility of Euro Area business cycles since 1970. Then we provide the quantitative sources of these changes using a medium-scale DSGE model allowing time variation in structural disturbance variances. We show that (1) the size of different types of shock oscillates, in a synchronized manner, between two regimes over time, with the high-volatility regime prevailing predominantly in the 1970s, sporadically in the 1980s and 1990s, and during the Great Recession; (2) their relative importance remains, however, unchanged across regimes, where neutral technology shocks and marginal efficiency of investment shocks are the dominant sources of business cycle fluctuations; and 3) these investment shocks, which affect the transformation of savings into productive capital, can be interpreted as an indicator of credit conditions.

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