Deep Recessions, Fast Recoveries, and Financial Crises: Evidence from the American Record

15 Pages Posted: 21 Nov 2016

See all articles by Michael D. Bordo

Michael D. Bordo

Rutgers University, New Brunswick - Department of Economics; National Bureau of Economic Research (NBER)

Joseph G. Haubrich

Federal Reserve Bank of Cleveland

Multiple version iconThere are 3 versions of this paper

Date Written: January 2017

Abstract

Do steep recoveries follow deep recessions? Does it matter if a credit crunch or banking panic accompanies the recession? We look at the American historical experience in an attempt to answer these questions. The answers depend on the definition of a financial crisis and on how much of the recovery is considered. But in general recessions associated with financial crises are followed by rapid recoveries. We find three exceptions to this pattern: the recovery from the Great Contraction in the 1930s, the recovery after the recession of the early 1990s, and the present recovery. The present recovery is strikingly more tepid than the 1990s. Possible factors to explain the slowness of this recovery include residential investment and policy uncertainty.

JEL Classification: E32, N10, G01

Suggested Citation

Bordo, Michael D. and Haubrich, Joseph G., Deep Recessions, Fast Recoveries, and Financial Crises: Evidence from the American Record (January 2017). Economic Inquiry, Vol. 55, Issue 1, pp. 527-541, 2017. Available at SSRN: https://ssrn.com/abstract=2872442 or http://dx.doi.org/10.1111/ecin.12374

Michael D. Bordo (Contact Author)

Rutgers University, New Brunswick - Department of Economics ( email )

New Brunswick, NJ
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Joseph G. Haubrich

Federal Reserve Bank of Cleveland ( email )

East 6th & Superior
Cleveland, OH 44101-1387
United States
216-579-2802 (Phone)
216-579-3050 (Fax)

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