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Recessions and recoveries

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Author Info

  • Mark A. Wynne
  • Nathan S. Balke

Abstract

The U.S. recession that began in July 1990 may have ended in April or May 1991. The pace of the subsequent recovery has been so sluggish as to be indistinguishable, in the eyes of many, from continued recession. One explanation for the sluggish pace of the recovery is that the recession itself was not particularly severe, at least when compared with others. ; In this article, Mark Wynne and Nathan Balke use monthly data on industrial production to examine the hypothesis that the severity of a recession determines the pace of the subsequent recovery. They show that, historically, the relationship between growth in the first twelve months of a recovery and the decline in industrial activity from peak to trough is statistically significant. However, there is no relationship between the length of a recession and the strength of the recovery. Consistent with their finding of a bounce-back effect for industrial production, the recovery from the 1990-91 recession is the weakest in the period covered by the Federal Reserve Board's industrial production index, just as the decline in industrial production over the course of that recession is the mildest on record.

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Bibliographic Info

Article provided by Federal Reserve Bank of Dallas in its journal Economic and Financial Policy Review.

Volume (Year): (1993)
Issue (Month): Jan ()
Pages: 1-17

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Handle: RePEc:fip:fedder:y:1993:i:jan:p:1-17

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Keywords: Production (Economic theory) ; Recessions;

References

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  1. Arthur F. Burns & Wesley C. Mitchell, 1946. "Measuring Business Cycles," NBER Books, National Bureau of Economic Research, Inc, number burn46-1, May.
  2. Daniel E. Sichel, 1992. "Inventories and the three phases of the business cycle," Working Paper Series / Economic Activity Section 128, Board of Governors of the Federal Reserve System (U.S.).
  3. Romer, Christina D., 1992. "What Ended the Great Depression?," The Journal of Economic History, Cambridge University Press, vol. 52(04), pages 757-784, December.
  4. Gerhard Bry & Charlotte Boschan, 1971. "Cyclical Analysis of Time Series: Selected Procedures and Computer Programs," NBER Books, National Bureau of Economic Research, Inc, number bry_71-1, May.
  5. Mark A. Wynne & Nathan S. Balke, 1992. "Are deep recessions followed by strong recoveries?," Research Paper 9201, Federal Reserve Bank of Dallas.
  6. Romer, Christina D., 1994. "Remeasuring Business Cycles," The Journal of Economic History, Cambridge University Press, vol. 54(03), pages 573-609, September.
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Cited by:
  1. Gregory W. Huffman, 1994. "A primer on the nature of business cycles," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q I, pages 27-41.
  2. Patrick Francois & Huw Lloyd-Ellis, 2001. "Animal Spirits meets Creative Destruction," Cahiers de recherche CREFE / CREFE Working Papers 130, CREFE, Université du Québec à Montréal.
  3. Hong, Kiseok & Tang, Hsiao Chink, 2012. "Crises in Asia: Recovery and policy responses," Journal of Asian Economics, Elsevier, vol. 23(6), pages 654-668.
  4. Patrick Francois & Huw Lloyd-Ellis, 2003. "Animal Spirits Through Creative Destruction," American Economic Review, American Economic Association, vol. 93(3), pages 530-550, June.
  5. Evan F. Koenig, 1996. "Capacity utilization as a real-time predictor of manufacturing output," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q III, pages 16-23.

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