Countercyclical Policy and the Speed of Recovery after Recessions

We consider policies intended to accelerate recoveries by analyzing the duration of recoveries of U.S. states. Studying multiple recessions for a state and multiple states for a recession controls for differences in the economic conditions and the causes of recessions. Expansionary monetary policy a...

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Bibliographic Details
Published in:Journal of money, credit and banking credit and banking, 2018-06, Vol.50 (4), p.675-704
Main Authors: FRANCIS, NEVILLE, JACKSON, LAURA E., OWYANG, MICHAEL T.
Format: Article
Language:English
Subjects:
business cycles
C23
E32
Economic conditions
Economic recovery
Monetary policy
Petroleum
Prices
Recessions
Suffering
survival analysis
Taxation
variable selection
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Summary:We consider policies intended to accelerate recoveries by analyzing the duration of recoveries of U.S. states. Studying multiple recessions for a state and multiple states for a recession controls for differences in the economic conditions and the causes of recessions. Expansionary monetary policy at the national level helps to stimulate the exit of individual states from recession. Exogenous measures of decreases in taxes or targeted increases in federal spending reduce state recovery times, while ambient economic conditions (other states in the same region suffering from recession, the length of the preceding recession, and increases in oil prices) extend recovery times.
ISSN:0022-2879
1538-4616
DOI:10.1111/jmcb.12477