Samuel Bentolila, Marcel Jansen, 01 February 2014

The evidence about the effect of declined lending during the Great Recession on the employment is quite limited. This column presents new research on the problem focusing on the case of Spain. A large part of credit to non-financial firms before the crisis came from weak banks, which solvency was strongly eroded during the crisis. As a result, firms that relied heavily on loans from such weak banks displayed significantly higher employment reduction in comparison to similar, less exposed firms. The bulk of employment destruction was driven by firm closures, which carries higher economic costs than downsizing, and could potentially make the recession more protracted.

Kyle Handley, Nuno Limão, 23 November 2013

The impact of policy uncertainty on economic activity is potentially important, but controversial because it is hard to identify and quantify. Recent research provides a framework to identify the impacts of policy uncertainty on firm decisions, and finds it has strong effects in the context of international trade. China’s WTO accession secured its most-favoured nation status in the US, and the evidence shows this reduction in uncertainty can explain a significant fraction of its export boom to the US.

Olivier Coibion, Yuriy Gorodnichenko, 15 November 2013

During the Great Recession, advanced economies have not experienced the disinflation that has historically been associated with high unemployment. This column shows that using consumers’ (as opposed to forecasters’) inflation expectations restores the traditional Phillips curve relationship for recent years. Consumers’ inflation expectations are more responsive to oil prices than those of professional forecasters. The increase in oil prices between 2009 and 2012 may in fact have prevented the onset of pernicious deflationary dynamics.

Knut Aastveit, Gisle Natvik, Sergio Sola, 19 October 2013

Many analysts blame uncertainty for at least part of advance nations’ poor economic performance since the crisis. This column discusses new research showing that the economic impact of monetary policy is dampened when uncertainty is high. This means that high uncertainty forces monetary policymakers into a trade-off between acting decisively and acting correctly as policy must be more aggressive than otherwise in order to stabilise economic activity. The finding is particularly stark when uncertainty measures from financial markets are utilised.

Marco Buti, Pier Carlo Padoan, 08 October 2013

The causes of the Eurozone’s slow growth are much debated. This column argues that fiscal consolidation will be less of a drag going forward but that the ongoing recovery remains fragile. A policy strategy is needed to support the recovery based on three mutually reinforcing elements – reducing policy uncertainty, repairing the financial system, and undertaking structural reforms.

Jan van Ours, 06 October 2013

In absolute terms, the Great Recession affected the unemployment rate of non-Western immigrants more than that of native workers in the Netherlands. However, this merely reflects their generally weak labour-market position – job-finding rates are much lower for non-Western immigrants than they are for natives. There is little difference between the cyclical sensitivity of these two groups’ unemployment or job-finding rates. In relative terms, the labour-market position of non-Western immigrants is bad, but the Great Recession did not make it worse.

M. Ayhan Kose, Prakash Loungani, Marco Terrones, 18 April 2013

The Great Recession has been followed by a ‘Not-So-Great Recovery’. Why the recovery has been weak and protracted remains a matter of debate. This column argues that one specific aspect of the current global recovery makes it different from previous ones. Over the course of past recoveries, both monetary and fiscal policies maintained an accommodative stance. In this global recovery, fiscal and monetary policies in advanced economies are pushing in opposite directions.

Marc Auboin, Martina Engemann, 03 December 2012

What effect does trade finance have on international trade? This column uses new data to stress the importance of trade finance for international trade both in crisis and in non-crisis periods. The major policy lesson is that there must be high levels of market incentives for supplying trade credit, particularly during a period of ‘deleveraging’ of the financial system. That said, trade credit statistics could be vastly improved if we wish to continue comparing global trade finance transactions against global trade.

Henry Siu, Nir Jaimovich, 06 November 2012

The US economy is recovering. But what explains the stubborn malaise in its labour market? This column argues that future recovery from recession will likely be jobless because technological advances and mechanisation now enable troubled firms to shed middle-income jobs in favour of machines and automation. If these jobs are not recouped during subsequent economic recovery, future recoveries may well remain jobless.

Stephanie Schmitt-Grohe, Martín Uribe, 16 September 2012

Since the onset of the great recession in peripheral Europe, nominal hourly wages have not fallen much from the high levels they had reached during the boom years in spite of widespread increases in unemployment. This paper analyses a number of national and supranational policy options for alleviating the unemployment problem, arguing that it is unlikely that a solution will come from within national borders.

Guillermo Calvo, Fabrizio Coricelli, Pablo Ottonello, 24 July 2012

Economic output in the US seems to have recovered since the Great Recession – but jobs have not. This ‘jobless recovery’ has led economists to argue that unemployment has reached a point where it can fall no further without further inflation. This column disagrees, suggesting the nature of the crisis affects the nature of the recovery.

Barry Eichengreen, Kevin O'Rourke, 06 March 2012

The debate over stimulus versus austerity continues unabated. This column shows that, while industrial production and trade recovered much more quickly than during the Great Depression, both series now appear to be slowing down. It suggests that, as St Augustine would have said had he been managing director of the IMF, there is a case for additional fiscal consolidation and monetary normalisation, but not yet.

Tommaso Monacelli, Vincenzo Quadrini, Antonella Trigari, 18 October 2011

Three years after the beginning of the Great Recession, the US unemployment rate remains at 9%, double its pre-crisis level. This column suggests the credit crunch may be behind this high number. It argues this is not because lower debt impairs the hiring ability of firms, but because it places firms in a less favourable bargaining position, allowing workers to negotiate higher wages, and thus reducing employment.

Lee Ohanian, Andrea Raffo, 16 October 2011

During the Great Recession, output in the US fell slightly less than in Germany while total hours worked fell nearly 8% in the US but only 1% in Germany. This column constructs a new dataset for total hours worked per quarter for the last 50 years in 14 OECD countries to check whether these patterns are consistent with previous historical episodes. It then suggests the labour-market weakness in the US may be fundamentally tied to the large decline in housing.

Tatiana Didier, Constantino Hevia, Sergio Schmukler, 09 August 2011

The global crisis of 2008-09 hit emerging markets nearly as hard as it hit rich countries, which is welcome news compared to previous crises in which emerging markets often suffered much more than developed economies. This column explores emerging economies' growth dynamics since the crisis.

Shekhar Aiyar, 12 May 2011

It is widely believed that banks played a central role in the Great Recession, but where is the smoking gun? This column presents evidence from the UK confirming the conventional wisdom. It finds that banks transmitted the unprecedented external funding shock by cutting back on domestic lending.

Nicholas Crafts, 24 February 2011

What started as a subprime crisis in the US soon spread to a global crisis resulting in what some have called the Great Recession. This column argues that economists spectacularly failed to take the prevention of financial crises seriously. But since then, economists have heeded the lessons from past crises and have helped avoid the worst.

Lucrezia Reichlin, Domenico Giannone, Michele Lenza, Huw Pill, 23 November 2010

Did monetary policy errors cause the economic collapse of the early 1930s? What lessons have monetary policymakers and central banks taken from this episode? Discussion Paper 8125 sets out to address these questions, in the context of the financial crisis of 2008-09 and with application to the euro area.

Kevin O'Rourke, 27 November 2009

Today’s great trade collapse has brought world trade to a point that is still substantially below the corresponding period during the Great Depression. The collapse, however, seems to be turning around along with the economic recovery. This chapter draws two critical Great-Depression lessons for today. First, policy makers must ensure that the recovery continues; many of the worst political and economic-policy transformations only came after the Great Depression was into its second and third years. Second, recent research shows that severe exchange rate misalignments teamed with rising unemployment led to much of the 1930s protectionism. The issue of the renminbi peg to the dollar is one that needs to be confronted sooner rather than later, for everyone's sake.



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