Revisiting the New Normal Hypothesis

Autor: Bertrand Candelon, Alina Carare, Keith Miao
Přispěvatelé: Macro, International & Labour Economics, RS: GSBE EFME
Rok vydání: 2015
Předmět:
Zdroj: Journal of International Money and Finance, 66, 5-31. ELSEVIER SCI LTD
ISSN: 0261-5606
Popis: The paper estimates the impact of crises on output growth and augments Cerra and Saxena's (2008) analysis by extending the data until 2010, and by taking into account globalization and contagion e ects. The paper nds that the decline in output growth rates following currency, banking and stock market crises are much larger in the sample ending in 2010, than in the one ending in 2001. The results are robust across di erent speci cations, including by factor augmenting the panel through the extraction of principal components from the output growth to account for globalization, and by using various crises databases. In addition, the paper nds that globalization has bene tted economic growth in the long run, but those gains have been diminishing in the new millennium. Moreover, globalization also ampli es the negative e ects of crises, especially for upper middle and high income OECD countries also starting with the new millenium. As such, lower output growth is to be expected as the new norm, especially in advanced economies for a lot longer than what would have been expected in the usual cyclical recovery, con rming El-Erian and PIMCO's (2009) statement on a "new normal". Finally, the factor augmenting panel also allows us to show in a new way that there are thresholds e ects of nance and globalization on growth.
Databáze: OpenAIRE
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