amerisclerosis the puzzle of rising u s unemployment persistence
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Amerisclerosis? The Puzzle of Rising U.S. Unemployment Persistence. Written By: Olivier Coibion, Yuriy Gorodnichenko, Dmitri Koustas Presented By: Drew Geissbuhler, Charles Meixelsperger, Jeffrey Zorr. Key Points. Similarities between Great Recession and Europe in the 1980s

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amerisclerosis the puzzle of rising u s unemployment persistence

Amerisclerosis? The Puzzle of Rising U.S. Unemployment Persistence

Written By: Olivier Coibion, Yuriy Gorodnichenko, Dmitri Koustas

Presented By: Drew Geissbuhler, Charles Meixelsperger, Jeffrey Zorr

key points
Key Points
  • Similarities between Great Recession and Europe in the 1980s
  • Differences in recent recessions
  • Economic shocks/policy factors
background information
Background Information
  • Early 1980s US and Western Europe both experience recessions
  • Western Europe had a prolonged recession compared to the U.S
  • 1990, 2001, and 2007 recessions all experienced persistent unemployment
similarities between 1980 western europe recession and u s now
Similarities Between 1980 Western Europe Recession and U.S. now
  • People were unwilling to move for jobs
  • Cultural Morals were low in 1980 Europe.
  • Average age of unemployed getting older
differences in recent recessions
Differences in recent Recessions
  • Long term unemployment has risen greatly.
  • Slow rate of Convergence.
  • Disability claims have gone up.
economic shocks
Economic Shocks
  • Account for initial rise in unemployment.
  • Many shocks in sequence can account for extended unemployment.
  • Not the case for recent post 1990 persistence.
policy changes
Policy Changes

Pre 1990

  • Small change in budget balance and government deficit.
  • The policies of Pre 1990 Recessions are less Contractionary.

Post 1990

  • Both 2001 and 2007 recessions show a large change in deficit.
  • If policy makers would have chosen similar actions to pre-1990 Unemployment would have recovered faster.
  • More Contractionary.
conclusion
Conclusion
  • U.S. economy has shown a slow recovery.
  • Post WWII and pre 1990 showed very quick recovery from the recession.
  • The authors disprove many factors believed to have great effect on unemployment persistence.
  • Implementation of new monetary and fiscal policies that adjust to new information help hasten unemployment recovery.
conclusion continued
Conclusion (continued)
  • Great Recession and future U.S. downturns are likely to last longer than those of the past so fiscal policy must adjust accordingly.
  • Fiscal policies should target longer-lived projects that focus on the long run rather than short run investments like more recent policies.
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