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Explaining theSlowU.S.Recovery: 2010'2017

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Abstract

This paper argues that the slow U.S. recovery after the 2008'2009 recession was due to sluggish government spending. The analysis uses a structural macroeconometric model. Conditional on government policy, the errors in predicting output for the 2009.4'2017.4 period are within what one would expect historically. Productivity and labor force participation are endogenous variables in the model, and so their behavior in this period is a consequence of the slow growth rather than a cause.

Suggested Citation

  • Ray C. Fair, 2018. "Explaining theSlowU.S.Recovery: 2010'2017," Cowles Foundation Discussion Papers 2124, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:2124
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    File URL: https://cowles.yale.edu/sites/default/files/files/pub/d21/d2124.pdf
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    1. Fay, Jon A & Medoff, James L, 1985. "Labor and Output over the Business Cycle: Some Direct Evidence," American Economic Review, American Economic Association, vol. 75(4), pages 638-655, September.
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    4. Eichengreen, Barry, 2016. "Hall of Mirrors: The Great Depression, the Great Recession, and the Uses-and Misuses-of History," OUP Catalogue, Oxford University Press, number 9780190621070.
    5. Kydland, Finn E. & Zarazaga, Carlos E.J.M., 2016. "Fiscal sentiment and the weak recovery from the Great Recession: A quantitative exploration," Journal of Monetary Economics, Elsevier, vol. 79(C), pages 109-125.
    6. Lee E. Ohanian, 2017. "The Great Recession in the Shadow of the Great Depression: A Review Essay on Hall of Mirrors: The Great Depression, the Great Recession, and the Uses and Misuses of History, by Barry Eichengreen," Journal of Economic Literature, American Economic Association, vol. 55(4), pages 1583-1601, December.
    7. Katharine G. Abraham & Melissa S. Kearney, 2020. "Explaining the Decline in the US Employment-to-Population Ratio: A Review of the Evidence," Journal of Economic Literature, American Economic Association, vol. 58(3), pages 585-643, September.
    8. John G. Fernald & Robert E. Hall & James H. Stock & Mark W. Watson, 2017. "The Disappointing Recovery of Output after 2009," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(1 (Spring), pages 1-81.
    9. Hansen, G.D. & Ohanian, L.E., 2016. "Neoclassical Models in Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 2043-2130, Elsevier.
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    Cited by:

    1. Di Bucchianico, Stefano, 2021. "Inequality, household debt, ageing and bubbles: A model of demand-side Secular Stagnation," IPE Working Papers 160/2021, Berlin School of Economics and Law, Institute for International Political Economy (IPE).

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    More about this item

    Keywords

    Slow recovery; Productivity;

    JEL classification:

    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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