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A NOTE ON BANKING AND HOUSING CRISES AND THE STRENGTH OF RECOVERIES

Published online by Cambridge University Press:  10 November 2015

Jens Boysen-Hogrefe ,
Nils Jannsen  and
Carsten-Patrick Meier
Jens Boysen-Hogrefe
Affiliation:
Kiel Institute for the World Economy
Nils Jannsen*
Affiliation:
Kiel Institute for the World Economy
Carsten-Patrick Meier
Affiliation:
Kiel Economics GmbH & Co. KG
*
Address correspondence to: Nils Jannsen, Kiel Institute for the World Economy, 24100 Kiel, Germany; e-mail: nils.jannsen@ifw-kiel.de.
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Abstract

We investigate whether recoveries following normal recessions differ from recoveries following recessions that are associated with either banking crises or housing crises. Using a parametric panel framework that allows for a bounce-back in the level of output during the recovery, we find that normal recessions are followed by strong recoveries in advanced economies. This bounce-back is absent following recessions associated with banking crises and housing crises. Consequently, the permanent output losses of recessions associated with banking crises and housing crises are considerably larger than those of normal recessions.

Keywords

Business CycleRecoveryBanking CrisisHousing Crisis
Type
Notes
Information
Macroeconomic Dynamics , Volume 20 , Issue 7 , October 2016 , pp. 1924 - 1933
Copyright
Copyright © Cambridge University Press 2015 

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