What Ends Recessions?

Christina Romer and David Romer

No 4765, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper analyzes the contributions of monetary and fiscal policy to postwar economic recoveries. We find that the Federal Reserve typically responds to downturns with prompt and large reductions in interest rates. Discretionary fiscal policy, in contrast, rarely reacts before the trough in economic activity, and even then the responses are usually small. Simulations using multipliers from both simple regressions and a large macroeconomic model show that the interest rate falls account for nearly all of the above-average growth that occurs early in recoveries. Our estimates also indicate that on several occasions expansionary policies have contributed substantially to above-normal growth outside of recoveries. Finally, the results suggest that the persistence of aggregate output movements is largely the result of the extreme persistence of the contribution of policy changes.

Date: 1994-06
Note: EFG ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (92)

Published as Fischer, S. and J. Rotemberg (eds.) NBER Macroeconomics Annual 1994. Cambridge: MIT Press, 1994.
Published as What Ends Recessions? , Christina D. Romer, David H. Romer. in NBER Macroeconomics Annual 1994, Volume 9 , Fischer and Rotemberg. 1994

Downloads: (external link)
http://www.nber.org/papers/w4765.pdf (application/pdf)

Related works:
Chapter: What Ends Recessions? (1994)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:4765

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w4765

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().