Economic Scarring: Channels and Policy Implications
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Summary:
This paper documents the existence of medium-to-long term output losses following large crises using panel data that cover 192 countries from 1970 to 2015 and shows that the magnitudes of economic scarring depend on the nature of the shock, economic activity, and pre-crisis conditions. It also provides a thorough review of potential channels that can lead to scarring and presents novel empirical evidence on the significance of supply-side channels using cross-country sectoral-level data. Finally, the paper discusses policy implications based on the empirical findings.
Series:
Working Paper No. 2022/248
Frequency:
regular
English
Publication Date:
December 9, 2022
ISBN/ISSN:
9798400227257/1018-5941
Stock No:
WPIEA2022248
Pages:
21
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