Region Focus

Fourth Quarter 2010

What Causes Recoveries? How good policy and good luck can trigger the upward side of the business cycle

As economies recover from recessions the transition often can be slow and unpredictable. Yet economists have studied this process less than one might expect. Many factors play important roles in determining the recovery process, including prudent monetary policy, clean balance sheets, consumer and business confidence, and exogenous shocks.

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Related Links

Balke, Nathan S. and Mark A. Wynne. “The Dynamics of Recoveries.” Federal Reserve Bank of Dallas Working Paper 94-06, April 1994.

Romer, Christina D., and David H. Romer. “What Ends Recessions?” In Fischer, Stanley, and Julio J. Rotemberg (eds.), NBER Macroeconomics Annual 1994. Cambridge, Mass.: MIT Press, 1994. (subscriber only)

Sinai, Allen. “The Business Cycle in a Changing Economy: Conceptualization, Measurement, Dating.American Economic Review, May 2010, vol. 100, no. 2, pp. 25-29.

Summers, Lawrence H. “Principles for Economic Recovery and Renewal.” Remarks at the National Association for Business Economics, Oct. 12, 2009.

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