Testing and Quantifying Economic Resilience

Naoko Hara and Yohei Yamamoto

No HIAS-E-142, Discussion paper series from Hitotsubashi Institute for Advanced Study, Hitotsubashi University

Abstract: We propose a formal testing procedure to examine resilience of an economy. Our approach is applicable even when a cross-section of control group is unavailable and circumvents potential bias in time-series regressions using data that includes structural breaks. We provide measures of shock absorption and cumulative recovery. Our em-pirical analysis reveals that most of the advanced countries were not resilient to the Global Financial Crisis, while many were so during the COVID-19 pandemic. Poten-tial determinants of economic resilience such as Fnancial leverage and labor market regulation may have negative correlations with these measures and other determinants have heterogenous associations depending on the nature of the crisis.

Keywords: Economic Resilience; Counterfactual Forecast; Pretesting; Global Financial Crisis; COVID-19 Pandemic (search for similar items in EconPapers)
JEL-codes: C12 C53 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2024-11-08
New Economics Papers: this item is included in nep-ecm
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hiasdp:hias-e-142

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