Type
Article
Titre
Inspecting the Mechanism: Leverage and the Great Recession in the Eurozone
Dans
American Economic Review
Auteur(s)
MARTIN Philippe - Département d'économie (Auteur)
PHILIPPON Thomas - Department of Mechanical Engineering (Auteur)
Éditeur
US : American Economic Association
Volume
107
Numéro
7
Pages
1904 - 1937 p.
ISSN
00028282
DOI
10.1257/aer.20150630
Mots clés
Great recession, Eurozone, Identification strategy
Résumé
EN
We provide a comprehensive account of the dynamics of eurozone countries from 2000 to 2012. We analyze private leverage, fiscal policy, labor costs and spreads, and we propose a model and an identification strategy to separate the impact of credit cycles, excessive government spending, and sudden stops. We then ask how periphery countries would have fared with different policies. We find that countries could have stabilized their employment if they had followed more conservative fiscal policies during the boom. Macro-prudential policies and an early intervention by the central bank to prevent market segmentation and reduce fiscal austerity would also have significantly reduced the recession.

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