María Dolores Gadea Rivas

The Failure to Predict the Great Recession - The Failure of Academic Economics? A View Focusing on the Role of Credit

Much has been written about why economists failed to predict the latest financial and real crisis. Reading the recent literature, it seems that the crisis was so obvious that economists must have been blind when looking at data not to see it coming. In this paper, we analyze whether such claims are justified by looking at one of the most cited and relevant variables in this analysis, the now infamous credit to GDP chart. We compare the conclusions reached in the literature after the crisis with the results that could have been drawn from an ex ante analysis. We show that, even though credit affects the business cycle in both the expansion and the recession phases, this effect is almost negligible and impossible to exploit from a policymaker’s point of view.

The two greatest. Great recession vs. great moderation

The collapse of the global economy in 2008, following the outbreak of the financial crisis, and the ensuing economic developments of the so-called Great Recession (GR) led many economists to suggest that the Great Moderation (GM) had, indeed, come to an end. This paper offers evidence that the decrease in output volatility still remains in force despite the GR and would do so even if the GR continues to extended horizons. This finding has important implications not only for academics, concerning the implementation of theoretical and empirical techniques, but also for policymakers, regarding the understanding of the pattern of recovery from the current and future recessions

Una mirada ingenua sobre las series del sector exterior, 1869–1999

Este trabajo propone periodificar el sector exterior de la Espana contemporanea (1869-1999) con mirada ingenua. Es decir, su propuesta es periodificar dejando que sea el analisis estadistico de las nuevas series de Prados (2003), quien establezca etapas y las caracterice. Los resultados asi obtenidos permiten afirmar que existieron dos etapas compactas pero diferentes entre si, separadas por una larga transicion. La primera etapa, hasta 1935, fue la de un comercio impredecible, con escasa relacion con la evolucion de la renta. La transicion se prolongo hasta 1960 como un periodo lleno de irregularidades. Ese ano se abre una segunda etapa compacta, la de un comercio de madurez, predecible y fuertemente vinculado a la evolucion de la renta.

Dissecting US Recoveries

We propose a set of new quantitative measures to characterise more fully the features of economic recoveries. We apply these measures to post-war US expansions and use cluster analysis to determine that there are two different types of recoveries in recent US economic history, with most expansions before 1984 (Great Moderation) looking quite different from those after.

Regional business cycles across europe

Large contractionary shocks such as the Great Recession or the sovereign debt crisis in Europe have rekindled interest in analyzing the overall patterns of business cycles. We study these patterns for Europe both at the national and the regional level. We first examine business cycles’ comovements and then, using Finite Mixture Markov Models, we obtain a dating of the different business cycles and identify clusters among them. We also propose an index to analyze within-country homogeneity. Our main findings are the following: (i) we find evidence of just one cluster amongst the European countries while, at the regional level, there is more heterogeneity and we identify five different groups of European regions; (ii) the groups are characterized as follows: the first contains most of the Greek regions; groups two and three include, in most cases, regions from Germany (plus a couple of regions from southern European countries in group two and some regions of the core countries in group three); group four is populated mainly by regions belonging to northern European countries; and group five is the largest and is composed of the rest of European regions; (iii) we notice that the degree of homogeneity of regional business cycles within countries is quite different; (iv) we also observe that spatial correlation increased during the convergence process towards the introduction of the euro and has taken a big leap with the Great Recession, both at country and regional level. In fact, comovements among regions have mainly increased during the last decade. These results have important implications for policymakers in the design of convergence policies at the European level and also in the design of fiscal policies to reduce regional disparities at the country level.

Clustering Regional Business Cycles

El objetivo de este trabajo es mostrar la utilidad de los modelos de Markov con mixturas finitas de distribuciones para el analisis regional. Estos modelos combinan tecnicas de agrupamiento y modelos de Markov Switching, proporcionando un marco metodologico solido que permite obtener de forma conjunta datados de los ciclos economicos regionales e identificar grupos de regiones que comparten caracteristicas similares del ciclo economico. Se ilustra el buen funcionamiento del metodo propuesto con datos del PIB de las regiones europeas.