Slow Recoveries, Endogenous Growth and Policy

The Scarring Effects of Deep Contractions

“…35 Ikeda and Kurozumi (2019) develop a model in which adverse financial shocks can induce a slow recovery and examine the implications for optimal monetary policy. A recent paper by Bonciani et al (2020) considered the implications for 33 Indeed, the stories embodied in these models via which the growth process occurs -e.g., "changes in the utilization of factor inputs when demand changes can result in reorganization and the acquisition of new skills" (Stadler, 1990) -are arguably better suited to describing expansions than contractions.…”