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International Evidence on Recovery from Recessions

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Listed:
  • Valerie Cerra
  • Sweta Chaman Saxena
  • Ugo Panizza

Abstract

Although negative shocks have persistent effects on output on average, this paper shows that macroeconomic policies and the structure of the economy can influence the speed of recovery and mitigate the persistence of the shock. Indeed, monetary and fiscal stimulus and foreign aid can spur a rebound, with impacts that are asymmetrically stronger than in nonrecovery years. Real depreciation and the exchange rate regime also have asymmetric growth effects in a recovery year relative to other years of expansion. Recoveries are more sluggish in open economies, partly because fiscal policy is less effective than in closed economies.

Suggested Citation

  • Valerie Cerra & Sweta Chaman Saxena & Ugo Panizza, 2009. "International Evidence on Recovery from Recessions," IMF Working Papers 09/183, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:09/183
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The growth problem
      by chris dillow in Stumbling and Mumbling on 2011-08-07 16:01:20
    2. On welfare incentives
      by chris in Stumbling and Mumbling on 2015-07-25 17:35:55

    Citations

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    Cited by:

    1. Mathilde Maurel & Gunther Schnabl, 2012. "Keynesian and Austrian Perspectives on Crisis, Shock Adjustment, Exchange Rate Regime and (Long-Term) Growth," Open Economies Review, Springer, vol. 23(5), pages 847-868, November.
    2. Berkmen, S. Pelin & Gelos, Gaston & Rennhack, Robert & Walsh, James P., 2012. "The global financial crisis: Explaining cross-country differences in the output impact," Journal of International Money and Finance, Elsevier, vol. 31(1), pages 42-59.
    3. Tomanova, Lucie, 2013. "Exchange Rate Volatility and the Foreign Trade in CEEC," EY International Congress on Economics I (EYC2013), October 24-25, 2013, Ankara, Turkey 267, Ekonomik Yaklasim Association.
    4. Hallerberg, Mark & Scartascini, Carlos, 2017. "Explaining changes in tax burdens in Latin America: Do politics trump economics?," European Journal of Political Economy, Elsevier, vol. 48(C), pages 162-179.
    5. Agnello, L. & Furceri, D. & R.M, Sousa., 2011. "Fiscal Policy Discretion, Private Spending, and Crisis Episodes," Working papers 354, Banque de France.
    6. Julien Allard & Rodolphe Blavy, 2011. "Market Phoenixes and Banking Ducks Are Recoveries Faster in Market-Based Financial Systems?," IMF Working Papers 11/213, International Monetary Fund.
    7. repec:hal:journl:halshs-00565231 is not listed on IDEAS
    8. Francesco Grigoli & Dalia S Hakura, 2010. "Recoveries in the Middle East, North Africa, and Pakistan; Have Macroeconomic Policies Been Effective?," IMF Working Papers 10/122, International Monetary Fund.
    9. repec:hal:journl:halshs-01318131 is not listed on IDEAS
    10. Davide, Furceri & Aleksandra, Zdzienicka, 2010. "Banking Crises and Short and Medium Term Output Losses in Developing Countries: The Role of Structural and Policy Variables," MPRA Paper 22078, University Library of Munich, Germany.
    11. Arratibel, Olga & Furceri, Davide & Martin, Reiner & Zdzienicka, Aleksandra, 2011. "The effect of nominal exchange rate volatility on real macroeconomic performance in the CEE countries," Economic Systems, Elsevier, vol. 35(2), pages 261-277, June.
    12. Hashiguchi, Yoshihiro & Yamano, Norihiko & Webb, Colin, 2017. "Economic shocks and changes in global production structure : methods for measuring economic resilience," IDE Discussion Papers 649, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    13. Mark Hallerberg & Carlos Scartascini, 2015. "Explaining Changes in Tax Burdens in Latin America: Does Politics Trump Economics?," IDB Publications (Working Papers) 90997, Inter-American Development Bank.
    14. Corry, Dan & Valero, Anna & Van Reenen, John, 2011. "UK economic performance since 1997: growth, productivity and jobs," LSE Research Online Documents on Economics 47521, London School of Economics and Political Science, LSE Library.
    15. Furceri, Davide & Zdzienicka, Aleksandra, 2012. "Banking Crises and Short and Medium Term Output Losses in Emerging and Developing Countries: The Role of Structural and Policy Variables," World Development, Elsevier, vol. 40(12), pages 2369-2378.
    16. repec:eee:ecolet:v:164:y:2018:i:c:p:65-69 is not listed on IDEAS
    17. Samer Matta & Simon Appleton & Michael Bleaney, 2017. "The Economic Impact of Political Instability and Mass Civil Protest," Discussion Papers 2017-03, University of Nottingham, CREDIT.
    18. Olivier Damette & Mathilde Maurel & Michael A. Stemmer, 2016. "What does it take to grow out of recession? An error-correction approach towards growth convergence of European and transition countries," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01318131, HAL.
    19. repec:eee:reveco:v:55:y:2018:i:c:p:54-67 is not listed on IDEAS
    20. Pedro Conceição & Sebastian Levine, "undated". "The African Moment: On the Brink of a Development Breakthrough," UNDP Africa Policy Notes 2011-001, United Nations Development Programme, Regional Bureau for Africa.
    21. Bernard Fingleton & Harry Garretsen & Ron Martin, 2012. "Recessionary Shocks And Regional Employment: Evidence On The Resilience Of U.K. Regions," Journal of Regional Science, Wiley Blackwell, vol. 52(1), pages 109-133, February.
    22. repec:rre:publsh:v47:y:2017:i:3:p:243-269 is not listed on IDEAS
    23. Martin, Robert & Munyan, Tenyanna & Wilson, Beth Anne, 2015. "Potential Output and Recessions: Are We Fooling Ourselves?," International Finance Discussion Papers 1145, Board of Governors of the Federal Reserve System (U.S.).
    24. Hiona Balfoussia & Heather D. Gibson, 2016. "Firm investment and financial conditions in the euro area: evidence from firm-level data," Working Papers 208, Bank of Greece.

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