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The Lasting Damage from the Financial Crisis to U.S. Productivity

Author

Listed:
  • Michael Redmond
  • Willem Van Zandweghe

Abstract

Michael Redmond and Willem Van Zandweghe find that tight credit conditions during the 2007?09 financial crisis dampened productivity, leaving it on a lower trajectory. The article is summarized in The Macro Bulletin.

Suggested Citation

  • Michael Redmond & Willem Van Zandweghe, 2016. "The Lasting Damage from the Financial Crisis to U.S. Productivity," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 39-64.
    • Handle: RePEc:fip:fedker:00036
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    References listed on IDEAS

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    1. Charles R. Hulten & Edwin R. Dean & Michael J. Harper, 2001. "New Developments in Productivity Analysis," NBER Books, National Bureau of Economic Research, Inc, number hult01-1, September.
    2. Barry Eichengreen & Donghyun Park & Kwanho Shin, 2017. "The Global Productivity Slump: Common and Country-Specific Factors," Asian Economic Papers, MIT Press, vol. 16(3), pages 1-41, Fall.
    3. Jeff E. Biddle, 2014. "Retrospectives: The Cyclical Behavior of Labor Productivity and the Emergence of the Labor Hoarding Concept," Journal of Economic Perspectives, American Economic Association, vol. 28(2), pages 197-212, Spring.
    4. repec:upd:utppwp:041 is not listed on IDEAS
    5. Laurence Ball, 2014. "Long-term damage from the Great Recession in OECD countries," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 11(2), pages 149-160, September.
    6. Petrosky-Nadeau, Nicolas, 2013. "TFP during a credit crunch," Journal of Economic Theory, Elsevier, vol. 148(3), pages 1150-1178.
    7. repec:upd:utppwp:015 is not listed on IDEAS
    8. Edward P. Lazear & Kathryn L. Shaw & Christopher Stanton, 2016. "Making Do with Less: Working Harder during Recessions," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 333-360.
    9. Dave Reifschneider & William Wascher & David Wilcox, 2015. "Aggregate Supply in the United States: Recent Developments and Implications for the Conduct of Monetary Policy," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 63(1), pages 71-109, May.
    10. Steven J. Davis & John Haltiwanger, 2014. "Labor Market Fluidity and Economic Performance," NBER Working Papers 20479, National Bureau of Economic Research, Inc.
    11. Daisuke Ikeda & Takushi Kurozumi, 2019. "Slow Post-financial Crisis Recovery and Monetary Policy," American Economic Journal: Macroeconomics, American Economic Association, vol. 11(4), pages 82-112, October.
    12. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters, in: This Time Is Different: Eight Centuries of Financial Folly, Princeton University Press.
    13. John Haltiwanger & Ron S. Jarmin & Javier Miranda, 2013. "Who Creates Jobs? Small versus Large versus Young," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 347-361, May.
    14. Mr. Daniel Garcia-Macia, 2017. "The Financing of Ideas and the Great Deviation," IMF Working Papers 2017/176, International Monetary Fund.
    15. Serena Ng & Jonathan H. Wright, 2013. "Facts and Challenges from the Great Recession for Forecasting and Macroeconomic Modeling," Journal of Economic Literature, American Economic Association, vol. 51(4), pages 1120-1154, December.
    16. Pablo Guerron-Quintana, 2014. "Liquidity, Trends, and the Great Recession," 2014 Meeting Papers 751, Society for Economic Dynamics.
    17. Mark Bils & Yongsung Chang & Sun-Bin Kim, 2022. "How Sticky Wages in Existing Jobs Can Affect Hiring," American Economic Journal: Macroeconomics, American Economic Association, vol. 14(1), pages 1-37, January.
    18. Diego Anzoategui & Diego Comin & Mark Gertler & Joseba Martinez, 2019. "Endogenous Technology Adoption and R&D as Sources of Business Cycle Persistence," American Economic Journal: Macroeconomics, American Economic Association, vol. 11(3), pages 67-110, July.
    19. Lucia Foster & John C. Haltiwanger & C. J. Krizan, 2001. "Aggregate Productivity Growth: Lessons from Microeconomic Evidence," NBER Chapters, in: New Developments in Productivity Analysis, pages 303-372, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Andrés Rodríguez‐Pose & Roberto Ganau & Kristina Maslauskaite & Monica Brezzi, 2021. "Credit constraints, labor productivity, and the role of regional institutions: Evidence from manufacturing firms in Europe," Journal of Regional Science, Wiley Blackwell, vol. 61(2), pages 299-328, March.
    2. Ian Goldin & Pantelis Koutroumpis & François Lafond & Julian Winkler, 2024. "Why Is Productivity Slowing Down?," Journal of Economic Literature, American Economic Association, vol. 62(1), pages 196-268, March.
    3. Ichiro Muto & Nao Sudo & Shunichi Yoneyama, 2023. "Productivity Slowdown in Japan's Lost Decades: How Much of It Can Be Attributed to Damaged Balance Sheets?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 85(1), pages 159-207, February.
    4. Adu-Darko, Eunice & You, Kefei, 2025. "Structural breaks, institutional quality and productivity growth in Sub-Saharan Africa," Structural Change and Economic Dynamics, Elsevier, vol. 74(C), pages 40-60.
    5. Michalô °€ Brzozowski, 2020. "Impact of Credit Market Development and Stability on Productivity: New Evidence from the Industry Level," Annals of Economics and Finance, Society for AEF, vol. 21(1), pages 111-129, May.
    6. Jhang, Shih-Sian (Sherwin) & Ogden, Joseph P. & Suresh, Nallan C., 2019. "Operational and financial configurations contingent on market power status," Omega, Elsevier, vol. 88(C), pages 91-109.
    7. Patricio Toro, 2019. "The Persistent Effect of a Credit Crunch on Output and Productivity: Technical or Allocative Efficiency?," Working Papers Central Bank of Chile 837, Central Bank of Chile.

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    More about this item

    Keywords

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    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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