A NOTE ON BANKING AND HOUSING CRISES AND THE STRENGTH OF RECOVERIES

We investigate whether recoveries following normal recessions differ from recoveries following recessions that are associated with either banking crises or housing crises. Using a parametric panel framework that allows for a bounce-back in the level of output during the recovery, we find that normal...

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Bibliographic Details
Published in:Macroeconomic dynamics 2016-10, Vol.20 (7), p.1924-1933
Main Authors: Boysen-Hogrefe, Jens, Jannsen, Nils, Meier, Carsten-Patrick
Format: Article
Language:English
Subjects:
Business cycles
Economic conditions
Economic recovery
Economic theory
GDP
Global economy
Gross Domestic Product
Housing
Macroeconomics
Recessions
Studies
Time series
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Summary:We investigate whether recoveries following normal recessions differ from recoveries following recessions that are associated with either banking crises or housing crises. Using a parametric panel framework that allows for a bounce-back in the level of output during the recovery, we find that normal recessions are followed by strong recoveries in advanced economies. This bounce-back is absent following recessions associated with banking crises and housing crises. Consequently, the permanent output losses of recessions associated with banking crises and housing crises are considerably larger than those of normal recessions.
ISSN:1365-1005
1469-8056
DOI:10.1017/S1365100515000164