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Economic resilience: Trade-offs between growth and economic fragility

Caldera, Aida, De Serres, Alain , Gori, Filippo , Röhn, Oliver, (2017), “Economic resilience: Trade-offs between growth and economic fragility”, Vox EU, 28 March

Major global crises such as the 2008-09 episode are rare, but severe recessions have been quite frequent over the past four decades, often with a large cumulated cost in terms of foregone income and high unemployment. Figure 1 shows the incidence of different crisis types (banking, currency, or sovereign debt crises) and the frequency of severe recessions in OECD countries since 1970. Severe recessions are defined as episodes characterised by a peak-to-trough fall in GDP exceeding the median fall across the entire country-year sample. Crisis episodes are identified using various commonly used datasets (Babecky et al. 2012, Reinhart and Rogoff 2013, Laeven and Valencia 2012).

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