The effect of financial crises on potential output: New empirical evidence from OECD countries

Furceri, Davide; Mourougane, Annabelle

doi:10.1016/j.jmacro.2012.05.010

Cited by 196 publications

(156 citation statements)

References 23 publications

Supporting

Mentioning

129

Contrasting

Unclassified

Order By: Relevance

“…This suggests that precrisis trends might not measure the sustainable path of GDP and that a persistent decline of GDP below these trends is a normal consequence of a financial crisis. Furceri and Mourougane (2012), who find (in line with the results described above) that financial crises come along with a permanent decline in potential output, additionally offer a decomposition of this decline into changes in potential employment, the capital stock, and Total Factor Productivity (TFP). They show that a financial crisis leads to a permanent decline in the capital stock of about 3 per cent on average, while potential employment only declines by about 1 per cent and TFP remains basically unchanged.…”

Section: Iva Typical Patterns Of Economic Activity During Financial supporting

confidence: 70%

Post-crisis business investment in the euro area and the role of monetary policy

Ademmer

Jannsen

2018

Applied Economics

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Business investment in the euro area strongly declined during the Global Financial Crisis and the Sovereign Debt Crisis. It has not yet rebounded to its pre-crisis trend despite the very expansionary monetary policy measures of the ECB. We analyse the sluggish recovery in business investment in the euro area and the role of monetary policy in three steps. We investigate the main factors that have impeded business investment since the Global Financial Crisis. We empirically analyse how business investment has developed compared to typical patterns during other financial crises. Based on these results, we then discuss how effective monetary policy has been in stimulating business investment since the Global Financial Crisis. We conclude that business investment in the euro area has developed broadly in line with typical post-crisis patterns. Monetary policy significantly contributed to stabilize business investment at the beginning of the crises. In the aftermath of the crises, however, there seems to be little scope for monetary policy to further stimulate investment. Terms of use: Documents in EconStor may

show abstract

Section: Iva Typical Patterns Of Economic Activity During Financial supporting

confidence: 70%

Post-crisis business investment in the euro area and the role of monetary policy

Ademmer

Jannsen

2018

Applied Economics

View full text Add to dashboard Cite

show abstract

“…Several recent papers have investigated the issue of whether financial crises constitute adverse supply shocks, by estimating their effects on long run or trend output (Barrell et al, 2010;Benati, 2012;Cecchetti et al, 2009;Cerra and Saxena, 2008;Furceri and Mourougane, 2009). We pursue a novel approach in terms of detecting an impact on inflation.…”

Section: Introductionmentioning

confidence: 99%

Do financial crises erode potential output? Evidence from OECD inflation responses

Bijapur¹

2012

Economics Letters

View full text Add to dashboard Cite

show abstract

“…This approach was initially proposed by Romer (1989, 2010), and it has been recently applied by Cerra and Saxena (2008), Furceri and Mourougane (2009) and Furceri and Zdzienicka (2011) to assess the impact of financial crises on economic activity. However, the IRFs derived using an ARDL specification tend to be sensitive to the choice of the number of lags, and as a result tend to be unstable.…”

Section: Methodology and Datamentioning

confidence: 99%

The Effects of Downturns on Labour Force Participation

Akcigit

Eris

Furceri

2011

OECD Economics Department Working Papers

View full text Add to dashboard Cite

JT03304316This paper uses an impulse-response function approach to assess the magnitude and persistence of the effects of downturns on labour force participation for a sample of 30 countries over the period . Past severe recessions appear to have had a significant and persistent impact on participation, while moderate downturns did not. The aggregate participation rate effect of severe downturns peaked on average at about 1½ to 2½ percentage points five to eight years after the cyclical peak, and was still significant after almost a decade. Youths and older workers account for the bulk of this effect. Institutional and policy settings are found to be an important factor having shaped the response of participation to economic downturns. In particular, early retirement incentives embedded in old-age pension schemes and other social transfer programmes are found to amplify the responsiveness of older workers' participation to economic conditions. However, the findings in this paper do not seem to apply to the most recent crisis, partly because the labour market situation did not deteriorate as much as the magnitude of the recession would have suggested in a number of OECD countries. JEL classification: J21, J26, C23, E32, H55Keywords: crises; downturns; recessions; labour force participation; retirement; hysteresis ***** Les effets des retournements de conjoncture sur la participation au marché du travail : évidence et causesCet article utilise une approche impulsion-réponse pour évaluer l'ampleur et la persistance des effets des retournements de conjoncture sur la participation au marché du travail pour un échantillon de 30 pays de l'OCDE sur la période 1960-2008. Il apparaît que les récessions sévères ont eu un impact significatif et persistant sur la participation dans le passé, au contraire des retournements de cycle plus modérés. L'effet agrégé des récessions sévères sur la participation a atteint un pic de 1½ à 2½ points de pourcentage cinq à huit ans après le point haut du cycle, et était toujours significatif après presque une décennie. Les jeunes et les seniors ont contribué à l'essentiel de cet effet. Les facteurs politiques et institutionnels jouent un rôle important dans la réponse de la participation aux retournements conjoncturels. En particulier, il apparaît que les incitations au départ anticipé à la retraite contenues dans les régimes de retraite et les autres systèmes de transferts sociaux accroissent la sensibilité de la participation des seniors aux conditions économiques. Pour autant, les résultats de cet article ne semblent pas s'appliquer à la crise récente, en partie parce que la situation du marché du travail ne s'est pas détériorée autant que l'ampleur de la récession aurait pu le suggérer dans un certain nombre de pays de l'OCDE.

show abstract

The effect of financial crises on potential output: New empirical evidence from OECD countries

Cited by 196 publications

References 23 publications

Post-crisis business investment in the euro area and the role of monetary policy

Post-crisis business investment in the euro area and the role of monetary policy

Do financial crises erode potential output? Evidence from OECD inflation responses

The Effects of Downturns on Labour Force Participation

Contact Info

Product

Resources

About