Diminished Expectations, Double Dips, and External Shocks: The Decade After the Fall

Reinhart, Carmen and Reinhart, Vincent (2010): Diminished Expectations, Double Dips, and External Shocks: The Decade After the Fall.

Abstract

In our recent paper, (Reinhart and Reinhart, 2010) we examine the behavior of real GDP (levels and growth rates), unemployment, inflation, bank credit, and real estate prices in a twenty one-year window surrounding selected adverse global and country-specific shocks or events. In this note, we summarize some of the main findings of that paper, including that economic growth is notably slower in the decade following a macroeconomic disruption. We extend those results to provide evidence of several post-crisis “double dips” in the years following the crisis. A faltering of economic recovery is not uncommon after a severe financial shock, although this can often be ascribed to exogenous events.

• Item Type: MPRA Paper
• Language: English
• Keywords: recession, unemployment, financial crisis, growth, external shocks
• Subjects: N - Economic History > N1 - Macroeconomics and Monetary Economics ; Industrial Structure ; Growth ; Fluctuations; F - International Economics > F3 - International Finance; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

References

Kaminsky, Graciela L., and Carmen M. Reinhart, Bank Lending and Contagion: Evidence From the Asian Crisis in Takatoshi Ito and Anne Krueger (eds.) Regional and Global Capital Flows: Macroeconomic Causes and Consequences (Chicago: University of Chicago Press for the NBER, 2001), 73-99.

Reinhart, Carmen M. and Vincent R. Reinhart, After the Fall, NBER Working Paper 16334, September 2010, forthcoming in Federal Reserve Bank of Kansas City Economic Policy Symposium Volume, Macroeconomic Challenges: The Decade Ahead at Jackson Hole, Wyoming, on August 26-28, 2010.

Reinhart, Carmen M. and Kenneth S. Rogoff (2009). This Time is Different: Eight Centuries of Financial Folly, (Princeton, NJ: Princeton Press).