Boysen-Hogrefe, Jens Jannsen, Nils Meier, Carsten-Patrick
Year of Publication:
Kiel Working Paper No. 1984
We investigate whether recoveries following normal recessions differ from recoveries following recessions that are associated with either banking crises or housing crises. Using a parametric panel framework that allows for a bounce-back in the level of output during the recovery, we find that normal recessions are followed by strong recoveries in advanced economies. This bounce-back is absent following recessions associated with banking crises and housing crises. Consequently, the permanent output losses of recessions associated with banking crises and housing crises are considerably larger than those of normal recessions.
business cycle recovery banking crisis housing crisis