Slow Recoveries: A Structural Interpretation |
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| Authors: | JORDI GALÍ FRANK SMETS RAFAEL WOUTERS |
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| Affiliation: | Jordi Galí is with CREI, Universitat Pompeu Fabra, and Barcelona GSE (E‐mail: jgali@crei.cat). Frank Smets is with European Central Bank, KU Leuven, University of Groningen, and CEPR (E‐mail: frank.smets@ecb.int). Rafael Wouters is with National Bank of Belgium (E‐mail: rafael.wouters@nbb.be). |
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| 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, and Wouters (2011) to provide a structural interpretation for the slower recoveries since the early nineties. |
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| Keywords: | E32 jobless recoveries U.S. business cycle estimated DSGE models Okun’ s law |
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