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Slow Recoveries: A Structural Interpretation

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  • JORDI GALÍ
  • FRANK SMETS
  • RAFAEL WOUTERS

Abstract

An analysis of the performance of GDP, employment and other labor market variables following the troughs in postwar U.S. business cycles points to much slower recoveries in the three most recent episodes, but does not reveal any significant change over time in the relation between GDP and employment. This leads us to characterize the last three episodes as slow recoveries, as opposed to jobless recoveries. We use the estimated New Keynesian model in Galí-Smets-Wouters (2011) to provide a structural interpretation for the slower recoveries since the early nineties.

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Bibliographic Info

Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.

Volume (Year): 44 (2012)
Issue (Month): (December)
Pages: 9-30

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Handle: RePEc:mcb:jmoncb:v:44:y:2012:i::p:9-30

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879

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  1. Christiano, Lawrence J. & Trabrandt, Mathias & Walentin, Karl, 2010. "Involuntary Unemployment and the Business Cycle," Working Paper Series 238, Sveriges Riksbank (Central Bank of Sweden), revised 01 Jun 2012.
  2. V.V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2008. "New Keynesian Models: Not Yet Useful for Policy Analysis," NBER Working Papers 14313, National Bureau of Economic Research, Inc.
  3. Frank Smets & Raf Wouters, 2007. "Shocks and Frictions in US Business Cycles : a Bayesian DSGE Approach," Working Paper Research 109, National Bank of Belgium.
  4. Jaimovich, Nir & Rebelo, Sérgio, 2006. "Can News About the Future Drive the Business Cycle?," CEPR Discussion Papers 5877, C.E.P.R. Discussion Papers.
  5. Erceg, Christopher J. & Henderson, Dale W. & Levin, Andrew T., 2000. "Optimal monetary policy with staggered wage and price contracts," Journal of Monetary Economics, Elsevier, vol. 46(2), pages 281-313, October.
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Cited by:
  1. Sandra Gomes & Nikolay Iskrev & Caterina Mendicino, 2013. "Monetary policy shocks: We got news!," Working Papers w201307, Banco de Portugal, Economics and Research Department.
  2. Luca Sala & Ulf Söderstrom & Antonella Trigari, 2012. "Structural and Cyclical Forces in the Labor Market during the Great Recession: Cross-Country Evidence," NBER Chapters, in: NBER International Seminar on Macroeconomics 2012, pages 345-404 National Bureau of Economic Research, Inc.
  3. Christopher L. Foote & Richard W. Ryan, 2012. "Labor-market polarization over the business cycle," Public Policy Discussion Paper 12-8, Federal Reserve Bank of Boston.
  4. Xavier Gabaix & David Laibson & Deyuan Li & Hongyi Li & Sidney Resnick & Casper G. de Vries, 2013. "The Impact of Competition on Prices with Numerous Firms," Working Papers 13-07, Chapman University, Economic Science Institute.
  5. Michael D. Bordo & Joseph G. Haubrich, 2012. "Deep Recessions, Fast Recoveries, and Financial Crises: Evidence from the American Record," NBER Working Papers 18194, National Bureau of Economic Research, Inc.
  6. Kevin x.d. Huang & Jie Chen & Zhe Li & Jianfei Sun, . "Financial Conditions and Slow Recoveries," Vanderbilt University Department of Economics Working Papers vuecon-sub-14-00004, Vanderbilt University Department of Economics.
  7. Rebecca Craigie & David Gillmore & Nicolas Groshenny, 2012. "Not a jobless recovery, just a slow one," Reserve Bank of New Zealand Analytical Notes series AN2012/06, Reserve Bank of New Zealand.
  8. Francesco Zanetti & Haroon Mumtaz, 2013. "The Effect of Labor and Financial Frictions on Aggregate Fluctuations," Economics Series Working Papers 690, University of Oxford, Department of Economics.
  9. Prieto, Esteban & Eickmeier, Sandra & Marcellino, Massimiliano, 2013. "Time variation in macro-financial linkages," Discussion Papers 13/2013, Deutsche Bundesbank, Research Centre.
  10. Sacht, Stephen, 2014. "Optimal monetary policy responses and welfare analysis within the highfrequency New-Keynesian framework," Economics Working Papers 2014-03, Christian-Albrechts-University of Kiel, Department of Economics.
  11. John Fernald, 2014. "Productivity and Potential Output Before, During, and After the Great Recession," NBER Working Papers 20248, National Bureau of Economic Research, Inc.
  12. Albinowski, Maciej & Ciżkowicz, Piotr & Rzońca, Andrzej, 2013. "Distrust in the ECB – product of failed crisis prevention or of inappropriate cure?," MPRA Paper 48242, University Library of Munich, Germany.

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