Possible Impact of the 2008-2009 Economic Crisis on Czech Potential Output Through the Labour Market

Janíčko, Martin; Micuch, Marek; Chytil, Zdeněk

doi:10.18267/j.aop.372

Cited by 1 publication

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“…Financial crises lower incentives to invest in capital by decreasing demand for products and raising uncertainty on investment returns and risk premia (Pindyck, 1991;Pindyck and Solimano, 1993;Janicko et al, 2012). A decrease in investment growth can translate into durable effects on potential output as a lack of capital reduces future productive capacity and leads to aging capital.…”

Section: There Is a Consensus That Financial Crisis Can Impact The Lementioning

confidence: 99%

Crisis, potential output and hysteresis

Mourougane

2017

International Economics

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This paper seeks to estimate the effects of financial crises on potential output accounting for hysteresis on a panel of 34 OECD economies. Hysteresis amplifies the effect of financial crises on potential output. The difference is marginal in the first years (below 0.5 percentage point) but grows over time to reach some 1.5 percentage points after four years, almost doubling the crisis impact on potential output at this horizon. These results are robust to a range of specifications. On average across crisis and country the maximum crisis effect on potential output is about 3 %. The effect appears to be more severe for the 2008 crisis though, with a maximum impact above 4 % on average for G7 countries. Small euro area countries and the United Kingdom appear to have suffered from bigger losses than the United States and Canada. Large euro area countries and Japan are estimated to be in an intermediary situation. Lastly, the empirical work undertaken in this paper suggests that financial crises have had on average an effect on potential growth in the first years following the crisis but not after.

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Section: There Is a Consensus That Financial Crisis Can Impact The Lementioning

confidence: 99%

Crisis, potential output and hysteresis

Mourougane

2017

International Economics

View full text Add to dashboard Cite

show abstract

Possible Impact of the 2008-2009 Economic Crisis on Czech Potential Output Through the Labour Market

Cited by 1 publication

References 14 publications

Crisis, potential output and hysteresis

Crisis, potential output and hysteresis

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