Discussion Paper Details

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Title: Slow Recoveries: A Structural Interpretation

Author(s): Jordi Galí, Frank Smets and Rafael Wouters

Publication Date: May 2012

Keyword(s): estimated DSGE models, Jobless recoveries, Okun's law and U.S. business cycle

Programme Area(s): International Macroeconomics

Abstract: An analysis of the performance of GDP, employment and other labor market variables following the troughs in postwar U.S. business cycles points to much slower recoveries in the three most recent episodes, but does not reveal any significant change over time in the relation between GDP and employment. This leads us to characterize the last three episodes as slow recoveries, as opposed to jobless recoveries. We use the estimated New Keynesian model in Galí-Smets-Wouters (2011) to provide a structural interpretation for the slower recoveries since the early nineties.

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Bibliographic Reference

Galí, J, Smets, F and Wouters, R. 2012. 'Slow Recoveries: A Structural Interpretation'. London, Centre for Economic Policy Research.