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Do large recessions reduce output permanently?

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  • Hosseinkouchack, Mehdi
  • Wolters, Maik H.

Abstract

We apply a recent quantile autoregression unit root test to US GDP. The test takes into account that the transmission of a shock might depend on the sign and the size of the shock. We find that positive and negative shocks including large recessionary shocks like the 2008/2009 crisis have permanent effects on output.

Suggested Citation

  • Hosseinkouchack, Mehdi & Wolters, Maik H., 2013. "Do large recessions reduce output permanently?," Economics Letters, Elsevier, vol. 121(3), pages 516-519.
    • Handle: RePEc:eee:ecolet:v:121:y:2013:i:3:p:516-519
    DOI: 10.1016/j.econlet.2013.10.012
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    More about this item

    Keywords

    Unit root tests; Quantile autoregression; GDP; Recessions; Asymmetries;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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