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Unraveling Amerisclerosis Puzzle: Insights on U.S. Unemployment Trends

Discover the comparative analysis between the Great Recession, the 1980s Europe recession, and recent U.S. economic downturns. Explore the economic shocks and policy changes impacting unemployment persistence. Gain valuable insights on the evolution of fiscal responses and their implications for future U.S. recession recoveries.

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Unraveling Amerisclerosis Puzzle: Insights on U.S. Unemployment Trends

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  1. 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

  2. Key Points • Similarities between Great Recession and Europe in the 1980s • Differences in recent recessions • Economic shocks/policy factors

  3. 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

  4. The Great Recession and the 1980s Recessions

  5. 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

  6. Differences in recent Recessions • Long term unemployment has risen greatly. • Slow rate of Convergence. • Disability claims have gone up.

  7. Scaled Unemployment Patterns across U.S. Recessions

  8. 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.

  9. 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.

  10. 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.

  11. 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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