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Testing and Quantifying Economic Resilience

Author

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  • HARA, Naoko
  • YAMAMOTO, Yohei

Abstract

We propose a formal testing procedure to examine resilience of an economy. Our approach is applicable even when a cross-section of control group is unavailable and circumvents potential bias in time-series regressions using data that includes structural breaks. We provide measures of shock absorption and cumulative recovery. Our em-pirical analysis reveals that most of the advanced countries were not resilient to the Global Financial Crisis, while many were so during the COVID-19 pandemic. Poten-tial determinants of economic resilience such as Fnancial leverage and labor market regulation may have negative correlations with these measures and other determinants have heterogenous associations depending on the nature of the crisis.

Suggested Citation

  • HARA, Naoko & YAMAMOTO, Yohei, 2024. "Testing and Quantifying Economic Resilience," Discussion paper series HIAS-E-142, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    • Handle: RePEc:hit:hiasdp:hias-e-142
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    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/84543/070_hiasDP-E-142.pdf
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    More about this item

    Keywords

    Economic Resilience; Counterfactual Forecast; Pretesting; Global Financial Crisis; COVID-19 Pandemic;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods

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