What Caused the Great Recession in the Eurozone?

34 Pages Posted: 25 Aug 2016

See all articles by Robert L. Hetzel

Robert L. Hetzel

Federal Reserve Banks - Federal Reserve Bank of Richmond

Date Written: 2016-08-23

Abstract

Since 2008, the Eurozone has undergone two recessions, which together constitute the "Great Recession." The combination of a decline in output and disinflation as well as a persistent decline in inflation suggests that contractionary monetary policy was one factor. This paper makes two methodological points. First, in analyzing the causes of the Great Recession, it is important to distinguish between credit and monetary policy. Second, a multiplicity of estimated models can "explain" the Great Recession. In practice, economists choose between models through an associated narrative that adds additional information about causation.

JEL Classification: E52, E58

Suggested Citation

Hetzel, Robert L., What Caused the Great Recession in the Eurozone? (2016-08-23). FRB Richmond Working Paper No. 16-10, Available at SSRN: https://ssrn.com/abstract=2828582

Robert L. Hetzel (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

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