Working Paper: NBER ID: w18751
Authors: Kathryn M.E. Dominguez; Matthew D. Shapiro
Abstract: This paper asks whether the slow recovery of the US economy from the trough of the Great Recession was anticipated, and identifies some of the factors that contributed to surprises in the course of the recovery. It constructs a narrative using news reports and government announcements to identify policy and financial shocks. It then compares forecasts and forecast revisions of GDP to the narrative. Successive financial and fiscal shocks emanating from Europe, together with self-inflicted wounds from the political stalemate over the US fiscal situation, help explain the slowing of the pace of an already slow recovery.
Keywords: No keywords provided
JEL Codes: E32; E37; N10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Financial and fiscal shocks from Europe (F65) | Slow recovery in the US from 2010 to 2012 (N12) |
| Negative news from Europe (N93) | Downward revisions in US GDP growth expectations (E20) |
| Financial distress in Europe (F65) | Influence on US economic policymaking confidence (E65) |
| Financial and fiscal shocks from Europe (F65) | Compounding factors for domestic impediments to growth (O17) |
| External shocks (F69) | Stalling of US economic recovery (E65) |