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Title:The ugly and the bad: banking and housing crises strangle output permanently, ordinary recessions do not PDF Logo
Authors:Boysen-Hogrefe, Jens
Jannsen, Nils
Meier, Carsten-Patrick
Issue Date:2010
Series/Report no.:Kiel working paper 1586
Abstract:This paper provides statistical evidence suggesting that in industrial countries, recessions that are associated with either banking crises or housing crises dampen output far more than ordinary recessions. Using a parametric panel framework that allows for a bounceback of the level of output in the course of the cyclical recovery, we find that ordinary recessions are followed by strong recoveries that make up for almost all the preceding shortfall in output. This bounceback tends to be significantly smaller following recessions associated with banking crises or housing crises. Our paper corroborates the practice of focusing exclusively on severe crises used in an emerging macroeconomic literature and integrates it with the earlier literature on recessions and recoveries.
Subjects:Business cycle
banking crisis
housing crisis
panel data
asymmetry
persistence
JEL:E32
C33
Document Type:Working Paper
Appears in Collections:Kieler Arbeitspapiere, IfW
Publikationen von Forscherinnen und Forschern des IfW

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