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Keywords:recessions 

Discussion Paper
Household Services Expenditures: An Update

This post updates and extends my July 2011 blog piece on household discretionary services expenditures. I examine the most recent data to see what they reveal about the depth of decline in expenditures in the last recession and the extent of the recovery, and find that the expenditures appear to be further below the peak identified earlier. I then compare the pace of recovery for discretionary and nondiscretionary services in this expansion with that of previous expansions, finding that the pace in both cases is well below that of previous cycles. In summary, household spending continues to ...
Liberty Street Economics , Paper 20121126

Working Paper
Bubbly Recessions

We develop a tractable rational bubbles model with financial frictions, downward nominal wage rigidity, and the zero lower bound. The interaction of financial frictions and nominal rigidities leads to a "bubbly pecuniary externality," where competitive speculation in risky bubbly assets can result in excessive investment booms that precede inefficient busts. The collapse of a large bubble can push the economy into a "secular stagnation" equilibrium, where the zero lower bound and the nominal wage rigidity constraint bind, leading to a persistent and inefficient recession. We evaluate a ...
Working Paper , Paper 18-5

How Many People Doubled Up after Losing Housing in Aftermath of Past Recessions?

People often move in with family or friends because they have lost housing or seek to economize after recessions.
On the Economy

Journal Article
Productivity During and Since the Pandemic

U.S. labor productivity initially surged in 2020 during the COVID-19 pandemic, despite the massive economic upheaval. As the economy recovered, the level of productivity retreated to its slow pre-pandemic trend. As of mid-2024, it remained close to but just above that trend. The surge and retreat in productivity follows the pre-pandemic cyclical relationship in which U.S. productivity rises temporarily in recessions. This example highlights the need to look through temporary cyclical effects when trying to infer longer-run trends.
FRBSF Economic Letter , Volume 2024 , Issue 31 , Pages 6

Journal Article
Does Fiscal Stimulus Work when Recessions Are Caused by Too Much Private Debt?

We argue that fiscal stimulus funded by public debt is effective for increasing economic activity and employment even in recessions that are caused by overborrowing in the private sector. We analyze the impact of government spending on local economies between 2007 and 2009 and find evidence that the fiscal multiplier is higher in geographical areas characterized by higher individual household debt. The higher multiplier in those areas might be attributed to a direct increase in both household consumption and local economic slack.
Economic Commentary , Issue August

Working Paper
Sovereigns versus Banks: Credit, Crises, and Consequences

Two separate narratives have emerged in the wake of the Global Financial Crisis. One speaks of private financial excess and the key role of the banking system in leveraging and deleveraging the economy. The other emphasizes the public sector balance sheet over the private and worries about the risks of lax fiscal policies. However, the two may interact in important and understudied ways. This paper studies the co-evolution of public and private sector debt in advanced countries since 1870. We find that in advanced economies financial stability risks have come from private sector credit booms ...
Working Paper Series , Paper 2013-37

Journal Article
Regional Economic Sentiment: Constructing Quantitative Estimates from the Beige Book and Testing Their Ability to Forecast Recessions

We use natural language processing methods to quantify the sentiment expressed in the Federal Reserve's anecdotal summaries of current economic conditions in the national and 12 Federal Reserve District-level economies as published eight times per year in the Beige Book since 1970. We document that both national and District-level economic sentiment tend to rise and fall with the US business cycle. But economic sentiment is extremely heterogeneous across Districts, and we find that national economic sentiment is not always the simple aggregation of District-level sentiment. We show that the ...
Economic Commentary , Volume 2024 , Issue 08 , Pages 8

What Is the Probability of a Recession? The Message from Yield Spreads

Statistical models using yield spreads can provide estimated odds of a future contraction. How do the odds change when using real vs. nominal interest rates?
On the Economy

Journal Article
Did the Great Recession Increase Skill Requirements?

Research Spotlight on "Do Recessions Accelerate Routine-Biased Technological Change? Evidence from Vacancy Postings." Brad Hershbein and Lisa B. Kahn. American Economic Review, July 2018, vol. 108, no. 7, pp. 1737-1772.
Econ Focus , Issue 3Q , Pages 7-7

Briefing
How Important Are Asset Price Fluctuations for Business Investment?

Previous recessions in the U.S. revealed to economists and policymakers that weak macroeconomic conditions may have been worsened by financial distress. Economists have theorized that this association is explained by a decline in physical asset prices that often precede recessions. When physical asset prices decline, firms pledge less-valuable assets to banks, which leads banks to reduce lending. Consequently, firms are not able to finance their investments, which reduces overall economic activity. In this article, we review more recent literature that may indicate that this mechanism is ...
Richmond Fed Economic Brief , Volume 23 , Issue 05

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