An Empirical Analysis of Macroeconomic Resilience: The Case of the Great Recession in the European Union

Jan Bruha and Oxana Babecká-Kucharčuková

Working Papers from Czech National Bank, Research and Statistics Department

Abstract: In this paper, we analyse macroeconomic developments in European economies since the Great Recession. We present evidence that macroeconomic developments in the EU countries can be classified into latent classes. Countries in a given class exhibit a similar pattern of economic and labour market developments during and after the crisis. We then present evidence that the latent classes of countries differ in terms of quality of institutions and regulation. Based on this, we conclude that quality of institutions and regulation are crucial for the resilience of countries to shocks. The most important country characteristics associated with a quick recovery after the initial shock are low protection of temporary contracts, political stability, regulatory quality and pre-crisis fiscal space. On the other hand, other types of employment protection and generosity of unemployment benefits seem to not influence resilience.

Keywords: Great Recession; institutions; regulation; resilience (search for similar items in EconPapers)
JEL-codes: C14 E02 E65 (search for similar items in EconPapers)
Date: 2017-12
New Economics Papers: this item is included in nep-eec and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:cnb:wpaper:2017/10

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