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Economic Brief

November 2011, No. 11-11

Recoveries From Recessions Associated With Banking Crises: How Does This One Compare?

Juan Carlos Hatchondo, David A. Price and Jonathan Tompkins

Recessions associated with banking crises tend to differ from other recessions in that the weakness of the financial sector, particularly the limited supply of credit, encumbers the subsequent recovery. The recovery from the 2007-09 recession, compared to past recoveries from recessions associated with banking crises, is within the historical range in terms of its level of GDP growth. In terms of unemployment, however, the recovery from the 2007-09 recession is markedly weaker than the historical norm.

Additional Resources

Bernanke, Ben S., "Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression," American Economic Review, June 1983, vol. 73, no. 3, pp. 257-276.

Terrones, Marco E., Alasdair Scott, Prakash Kannan et al., "From Recession to Recovery: How Soon and How Strong?" in World Economic Outlook, International Monetary Fund, 2009.

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