Sunday, December 16, 2012

This One Is Different?

"When you do look at the data the results are clear. In five of the six financial crises since 1882 - the Great Depression of the 1930s was the sole exception - the strength of the recovery in real Gross National Product greatly exceeds the previous decline, by close to 6 percentage points over the eight quarters following the cyclical trough. 
"This is similar to what we see in the two severe contractions in which there are no financial crises. The recent recession and recovery are more similar to the Great Depression than the other episodes.  Cross-country comparisons tell a similar story. Unemployment actually recovered faster in countries hit by a financial crisis than in those in a recession for other reasons. Of the nine foreign countries for which the Bureau of Labor Statistics has produced comparable unemployment data based on the same definition of unemployment, Reinhart and Rogoff identify four as suffering from a financial crisis (Germany, Japan, the Netherlands and the United Kingdom) and five as not (Australia, Canada, France, Italy and Sweden). From January 2009 to December 2011, the unemployment rates in the countries with financial crises actually increased less than in those that avoided such a crisis (0.66 percentage points versus 0.86 percentage points)."

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