EIB Working Paper 2022/14 - The scarring effects of major economic downturns
"Despite the efforts of policy makers to tackle recessions as they happen, there is ample evidence that major economic downturns produce lasting negative effects on real GDP, pointing to the existence of “economic scarring”. This paper takes a fresh look at economic scarring in 26 OECD countries,...
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| Hoofdauteur: | |
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| Formaat: | Online |
| Taal: | Engels |
| Gepubliceerd in: |
European Investment Bank
2022
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| Online toegang: | https://library.oapen.org/handle/20.500.12657/60265 |
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| _version_ | 1869517177005015040 |
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| author | European Investment Bank |
| author_browse | European Investment Bank |
| author_facet | European Investment Bank |
| author_sort | European Investment Bank |
| collection | Directory of Open Access Books |
| description | "Despite the efforts of policy makers to tackle recessions as they happen, there is ample evidence that major economic downturns produce lasting negative effects on real GDP, pointing to the existence of “economic scarring”. This paper takes a fresh look at economic scarring in 26 OECD countries, including 14 EU member states, since 1970 and examines the role played by fiscal policy in limiting these impacts. It finds that higher current expenditure does not mitigate the lasting impact of major economic downturns on real GDP. By contrast, more government investment could help to do so, but this is generally less favoured as a policy response. As a result, scarring effects are significant, confronting governments with higher debt levels, which in turn weigh on the room for manoeuvre in subsequent downturns. In sum, fiscal policy makers face two difficulties in the event of a major economic downturn: adopting the right type of fiscal expansion, and finding the right time to pivot from short-term stabilisation to fiscal consolidation, while protecting investment." |
| format | Online |
| id | doab-20.500.12854ir-95442 |
| institution | Directory of Open Access Books |
| language | eng |
| publishDate | 2022 |
| publishDateRange | 2022 |
| publishDateSort | 2022 |
| publisher | European Investment Bank |
| publisherStr | European Investment Bank |
| record_format | ojs |
| spelling | doab-20.500.12854ir-954422025-07-31T13:05:34Z EIB Working Paper 2022/14 - The scarring effects of major economic downturns European Investment Bank Business & Economics Banks & Banking Business & Economics thema EDItEUR::K Economics, Finance, Business and Management::KF Finance and accounting::KFF Finance and the finance industry::KFFK Banking thema EDItEUR::K Economics, Finance, Business and Management::KJ Business and Management "Despite the efforts of policy makers to tackle recessions as they happen, there is ample evidence that major economic downturns produce lasting negative effects on real GDP, pointing to the existence of “economic scarring”. This paper takes a fresh look at economic scarring in 26 OECD countries, including 14 EU member states, since 1970 and examines the role played by fiscal policy in limiting these impacts. It finds that higher current expenditure does not mitigate the lasting impact of major economic downturns on real GDP. By contrast, more government investment could help to do so, but this is generally less favoured as a policy response. As a result, scarring effects are significant, confronting governments with higher debt levels, which in turn weigh on the room for manoeuvre in subsequent downturns. In sum, fiscal policy makers face two difficulties in the event of a major economic downturn: adopting the right type of fiscal expansion, and finding the right time to pivot from short-term stabilisation to fiscal consolidation, while protecting investment." 2022-12-17T04:03:00Z 2022-12-17T04:03:00Z 2022-12-16T05:31:31Z 2022 book https://library.oapen.org/handle/20.500.12657/60265 9789286154072 https://directory.doabooks.org/handle/20.500.12854/95442 eng open access image/jpeg image/jpeg image/jpeg image/jpeg Attribution-NonCommercial-NoDerivatives 4.0 International Attribution-NonCommercial-NoDerivatives 4.0 International Attribution-NonCommercial-NoDerivatives 4.0 International Attribution-NonCommercial-NoDerivatives 4.0 International https://library.oapen.org/bitstream/20.500.12657/60265/1/20220256_economics_working_paper_2022_14_en.pdf https://library.oapen.org/bitstream/20.500.12657/60265/1/20220256_economics_working_paper_2022_14_en.pdf https://library.oapen.org/bitstream/20.500.12657/60265/1/20220256_economics_working_paper_2022_14_en.pdf https://library.oapen.org/bitstream/20.500.12657/60265/1/20220256_economics_working_paper_2022_14_en.pdf European Investment Bank European Investment Bank 10.2867/792600 10.2867/792600 feca012f-a3d8-4aac-95aa-b6cf4bdbed7c Knowledge Unlatched 9789286154072 Knowledge Unlatched (KU) KU Open Services European Investment Bank open access |
| spellingShingle | Business & Economics Banks & Banking Business & Economics thema EDItEUR::K Economics, Finance, Business and Management::KF Finance and accounting::KFF Finance and the finance industry::KFFK Banking thema EDItEUR::K Economics, Finance, Business and Management::KJ Business and Management European Investment Bank EIB Working Paper 2022/14 - The scarring effects of major economic downturns |
| title | EIB Working Paper 2022/14 - The scarring effects of major economic downturns |
| title_full | EIB Working Paper 2022/14 - The scarring effects of major economic downturns |
| title_fullStr | EIB Working Paper 2022/14 - The scarring effects of major economic downturns |
| title_full_unstemmed | EIB Working Paper 2022/14 - The scarring effects of major economic downturns |
| title_short | EIB Working Paper 2022/14 - The scarring effects of major economic downturns |
| title_sort | eib working paper 2022 14 the scarring effects of major economic downturns |
| topic | Business & Economics Banks & Banking Business & Economics thema EDItEUR::K Economics, Finance, Business and Management::KF Finance and accounting::KFF Finance and the finance industry::KFFK Banking thema EDItEUR::K Economics, Finance, Business and Management::KJ Business and Management |
| topic_facet | Business & Economics Banks & Banking Business & Economics thema EDItEUR::K Economics, Finance, Business and Management::KF Finance and accounting::KFF Finance and the finance industry::KFFK Banking thema EDItEUR::K Economics, Finance, Business and Management::KJ Business and Management |
| url | https://library.oapen.org/handle/20.500.12657/60265 |
| work_keys_str_mv | AT europeaninvestmentbank eibworkingpaper202214thescarringeffectsofmajoreconomicdownturns |