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The Scarring and Hysteresis Effects of Steep Recessions and the Implications for Fiscal Policy in ECA Transition EMDEs

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dc.contributor.authorBrownbridge, Martin
dc.contributor.authorCanagarajah, Sudharshan
dc.date.accessioned2021-06-02T15:25:36Z
dc.date.available2021-06-02T15:25:36Z
dc.date.issued2021-06
dc.description.abstractThe deep recession in many of the emerging market transition economies of Europe and Central Asia caused by the COVID-19 crisis has raised fears of long-term damage to potential output through scarring and hysteresis. These economies were also hit hard by the great recession caused by the global financial crisis. This paper provides empirical estimates of the impact of the great recession on the subsequent medium-term level of real gross domestic product in a sample of 65 middle-income countries. It finds evidence of a significant hysteresis parameter in these countries. The paper also examines how the combination of a hysteresis parameter and a positive fiscal multiplier can mean that a countercyclical fiscal expansion that successfully mitigates the output loss in a recession need not worsen public debt levels in the medium to long term because of its positive impact on potential output and thus the tax base.en
dc.identifierhttp://documents.worldbank.org/curated/en/321251622554430953/The-Scarring-and-Hysteresis-Effects-of-Steep-Recessions-and-the-Implications-for-Fiscal-Policy-in-ECA-Transition-EMDEs
dc.identifier.doi10.1596/1813-9450-9682
dc.identifier.urihttps://hdl.handle.net/10986/35644
dc.languageEnglish
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 9682
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo
dc.subjectFISCAL POLICY
dc.subjectCORONAVIRUS
dc.subjectCOVID-19
dc.subjectPANDEMIC RESPONSE
dc.subjectECONOMIC RECESSION
dc.subjectEMERGING MARKET ECONOMIES
dc.subjectGLOBAL FINANCIAL CRISIS
dc.subjectHYSTERESIS
dc.subjectCOUNTERCYCLICAL POLICY
dc.subjectPUBLIC DEBT
dc.titleThe Scarring and Hysteresis Effects of Steep Recessions and the Implications for Fiscal Policy in ECA Transition EMDEsen
dc.typeWorking Paperen
dc.typeDocument de travailfr
dc.typeDocumento de trabajoes
dspace.entity.typePublication
okr.crossref.titleThe Scarring and Hysteresis Effects of Steep Recessions and the Implications for Fiscal Policy in ECA Transition Emdes
okr.date.disclosure2021-06-01
okr.date.doiregistration2025-04-10T09:53:24.700539Z
okr.doctypePublications & Research
okr.doctypePublications & Research::Policy Research Working Paper
okr.docurlhttp://documents.worldbank.org/curated/en/321251622554430953/The-Scarring-and-Hysteresis-Effects-of-Steep-Recessions-and-the-Implications-for-Fiscal-Policy-in-ECA-Transition-EMDEs
okr.guid321251622554430953
okr.identifier.doi10.1596/1813-9450-9682
okr.identifier.externaldocumentum090224b088659aab_1_0
okr.identifier.internaldocumentum33129261
okr.identifier.reportWPS9682
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/321251622554430953/pdf/The-Scarring-and-Hysteresis-Effects-of-Steep-Recessions-and-the-Implications-for-Fiscal-Policy-in-ECA-Transition-EMDEs.pdfen
okr.region.administrativeEurope and Central Asia
okr.region.geographicalCentral Asia
okr.region.geographicalEastern Europe
okr.region.geographicalEurope and Central Asia
okr.topicPublic Sector Development::Public Sector Economics
okr.topicMacroeconomics and Economic Growth::Business Cycles and Stabilization Policies
okr.topicMacroeconomics and Economic Growth::Economic Policy, Institutions and Governance
okr.topicMacroeconomics and Economic Growth::Fiscal & Monetary Policy
okr.unitOffice of the Chief Economist, Europe and Central Asia Region
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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