INTERNATIONAL EVIDENCE ON RECOVERY FROM RECESSIONS

Abstract

Although negative shocks have persistent effects on output on average, this article shows that macroeconomic policies can influence the speed of recovery and mitigate the persistence of the shock. Indeed, monetary and fiscal stimulus and foreign aid can spur a rebound, with impacts that are asymmetrically stronger than in non‐recovery years. Real depreciation and the exchange rate regime also have asymmetric growth effects in a recovery year relative to other years of expansion . ( JEL C23, E32, F43, O43)