International Evidence on Recovery from Recessions

31 Pages Posted: 17 Sep 2009

See all articles by Valerie Cerra

Valerie Cerra

International Monetary Fund (IMF)

Ugo Panizza

United Nations - Conference on Trade and Development (UNCTAD)

Sweta Chaman Saxena

affiliation not provided to SSRN

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Date Written: August 2009

Abstract

Although negative shocks have persistent effects on output on average, this paper shows that macroeconomic policies and the structure of the economy can influence the speed of recovery and mitigate the persistence of the shock. Indeed, monetary and fiscal stimulus and foreign aid can spur a rebound, with impacts that are asymmetrically stronger than in nonrecovery years. Real depreciation and the exchange rate regime also have asymmetric growth effects in a recovery year relative to other years of expansion. Recoveries are more sluggish in open economies, partly because fiscal policy is less effective than in closed economies.

Keywords: Banking crisis, Business cycles, Concessional aid, Developed countries, Economic growth, Economic recession, Economic recovery, Emerging markets, Exchange rate regimes, External shocks, Fiscal policy, Monetary policy, Real effective exchange rates, Trade policy

Suggested Citation

Cerra, Valerie and Panizza, Ugo and Saxena, Sweta Chaman, International Evidence on Recovery from Recessions (August 2009). IMF Working Paper No. 09/183, Available at SSRN: https://ssrn.com/abstract=1474591

Valerie Cerra

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-8596 (Phone)

Ugo Panizza

United Nations - Conference on Trade and Development (UNCTAD) ( email )

Palais des Nations
Geneva, 1211
United States

Sweta Chaman Saxena

affiliation not provided to SSRN

No Address Available

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