Output Spillovers from Fiscal Policy Auerbach, Alan J.; Gorodnichenko, Yuriy
The American economic review,
05/2013, Letnik:
103, Številka:
3
Journal Article
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For a large number of OECD countries we estimate the cross-country spillover effects of government purchases on output. Following the methodology in Auerbach and Gorodnichenko (2012a, b), we allow ...these multipliers to vary smoothly according to the state of the economy and use real-time forecast data to purge policy innovations of their predictable components. Our findings suggest that cross-country spillovers have an important impact. The findings also confirm those of our earlier papers--namely that fiscal shocks have a larger impact when the affected country is in recession. PUBLICATION ABSTRACT
The Repoliticization of the Welfare State grapples with the evolving nature of political conflict over social spending after the Great Recession. While the severity of the economic crisis encouraged ...strong social spending responses to protect millions of individuals, governments have faced growing pressure to reduce budgets and make deep cuts to the welfare state. Whereas conservative parties have embraced fiscal discipline and welfare state cuts, left-wing parties have turned away from austerity in favor of higher social spending. These political differences represent a return of traditional left-right beliefs over social spending and economic governance. This book is one of the first to systematically compare welfare state politics before and after the Great Recession, arguing that a new and lasting post-crisis dynamic has emerged where political parties once again matter for social spending. At the heart of this repoliticization are intense ideological debates over market regulation, social inequality, redistribution, and the role of the state. The book analyzes social spending dynamics for 28 countries before and after the crisis. It also includes in-depth country case studies representing five distinct welfare state types: Germany, the United Kingdom, Sweden, Spain, and the Czech Republic.
Disability Insurance and the Great Recession Maestas, Nicole; Mullen, Kathleen J.; Strand, Alexander
The American economic review,
05/2015, Letnik:
105, Številka:
5
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The US Social Security Disability Insurance (SSDI) program is designed to provide income support to workers who become unable to work because of a severe, long-lasting disability. In this study, we ...use administrative data to estimate the effect of labor market conditions, as measured by the unemployment rate, on the number of SSDI applications, the number and composition of initial allowances and denials, and the timing of applications relative to disability onset. We analyze the period of the Great Recession, and compare this period with business cycle effects over the past two decades, from 1992 through 2012.
On DSGE Models Christiano, Lawrence J.; Eichenbaum, Martin S.; Trabandt, Mathias
The Journal of economic perspectives,
07/2018, Letnik:
32, Številka:
3
Journal Article
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The outcome of any important macroeconomic policy change is the net effect of forces operating on different parts of the economy. A central challenge facing policymakers is how to assess the relative ...strength of those forces. Economists have a range of tools that can be used to make such assessments. Dynamic stochastic general equilibrium (DSGE) models are the leading tool for making such assessments in an open and transparent manner. We review the state of mainstream DSGE models before the financial crisis and the Great Recession. We then describe how DSGE models are estimated and evaluated. We address the question of why DSGE modelers—like most other economists and policymakers—failed to predict the financial crisis and the Great Recession, and how DSGE modelers responded to the financial crisis and its aftermath. We discuss how current DSGE models are actually used by policymakers. We then provide a brief response to some criticisms of DSGE models, with special emphasis on criticism by Joseph Stiglitz, and offer some concluding remarks.
Fluctuations in Uncertainty Bloom, Nicholas
The Journal of economic perspectives,
04/2014, Letnik:
28, Številka:
2
Journal Article
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Uncertainty is an amorphous concept. It reflects uncertainty in the minds of consumers, managers, and policymakers about possible futures. It is also a broad concept, including uncertainty over the ...path of macro phenomena like GDP growth, micro phenomena like the growth rate of firms, and noneconomic events like war and climate change. In this essay, I address four questions about uncertainty. First, what are some facts and patterns about economic uncertainty? Both macro and micro uncertainty appear to rise sharply in recessions and fall in booms. Uncertainty also varies heavily across countries—developing countries appear to have about one-third more macro uncertainty than developed countries. Second, why does uncertainty vary during business cycles? Third, do fluctuations in uncertainty affect behavior? Fourth, has higher uncertainty worsened the Great Recession and slowed the recovery? Much of this discussion is based on research on uncertainty from the last five years, reflecting the recent growth of the literature.
Escaping the Great Recession Bianchi, Francesco; Melosi, Leonardo
The American economic review,
04/2017, Letnik:
107, Številka:
4
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We show that policy uncertainty about how the rising public debt will be stabilized accounts for the lack of deflation in the US economy at the zero lower bound. We first estimate a Markov-switching ...VAR to highlight that a zero-lower-bound regime captures most of the comovements during the Great Recession: a deep recession, no deflation, and large fiscal imbalances. We then show that a microfounded model that features policy uncertainty accounts for these stylized facts. Finally, we highlight that policy uncertainty arises at the zero lower bound because of a trade-off between mitigating the recession and preserving long-run macroeconomic stability.
The notion of ‘resilience’ has recently risen to prominence in several disciplines, and has also entered policy discourse. Yet, the meaning and relevance of the concept are far from settled matters. ...This article develops the idea of resilience and examines its usefulness as an aid to understanding the reaction of regional economies to major recessionary shocks. But in so doing, it is also argued that the notion of resilience can usefully be combined with that of hysteresis in order to more fully capture the possible reactions of regional economies to major recessions. These ideas are then used as the basis for a preliminary empirical analysis of the UK regions.
What Happened Gertler, Mark; Gilchrist, Simon
The Journal of economic perspectives,
07/2018, Letnik:
32, Številka:
3
Journal Article
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At the onset of the recent global financial crisis, the workhorse macroeconomic models assumed frictionless financial markets. These frameworks were thus not able to anticipate the crisis, nor to ...analyze how the disruption of credit markets changed what initially appeared like a mild downturn into the Great Recession. Since that time, an explosion of both theoretical and empirical research has investigated how the financial crisis emerged and how it was transmitted to the real sector. The goal of this paper is to describe what we have learned from this new research and how it can be used to understand what happened during the Great Recession. In the process, we also present some new empirical work. We argue that a complete description of the Great Recession must take account of the financial distress facing both households and banks and, as the crisis unfolded, nonfinancial firms as well. Exploiting both panel data and time series methods, we analyze the contribution of the house price decline, versus the banking distress indicator, to the overall decline in employment during the Great Recession. We confirm a common finding in the literature that the household balance sheet channel is important for regional variation in employment. However, we also find that the disruption in banking was central to the overall employment contraction.
This article reviews research on the effects of economic recessions on fertility in the developed world. We study how economic downturns, as measured by various indicators, especially by declining ...GDP levels, falling consumer confidence, and rising unemployment, were found to affect fertility. We also discuss particular mechanisms through which the recession may have influenced fertility behavior, including the effects of economic uncertainty, falling income, changes in the housing market, and rising enrollment in higher education, and also factors that influence fertility indirectly such as declining marriage rates. Most studies find that fertility tends to be pro-cyclical and often rises and declines with the ups and downs of the business cycle. Usually, these aggregate effects are relatively small (typically, a few percentage points) and of short durations; in addition they often influence especially the timing of childbearing and in most cases do not leave an imprint on cohort fertility levels. Therefore, major long-term fertility shifts often continue seemingly uninterrupted during the recession—including the fertility declines before and during the Great Depression of the 1930s and before and during the oil shock crises of the 1970s. Changes in the opportunity costs of childbearing and fertility behavior during economic downturn vary by sex, age, social status, and number of children; childless young adults are usually most affected. Furthermore, various policies and institutions may modify or even reverse the relationship between recessions and fertility. The first evidence pertaining to the recent recession falls in line with these findings. In most countries, the recession has brought a decline in the number of births and fertility rates, often marking a sharp halt to the previous decade of rising fertility rates.
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