Postwar Financial Crises and Economic Recoveries in the United States

Abstract

We reconsider the connection between financial crises and economic recoveries in the postwar United States. We proceed in two steps. First, we provide a chronology of financial crises in the United States. We make the case that the postwar period prior to 2007 should be characterized as featuring three periods of financial crisis: 1973−1975, 1982−1984, and 1988−1991. This implies a substantially different postwar chronology of financial crises from that advanced by Reinhart and Rogoff (2009a, 2009b). The second step in our analysis is to reexamine economic recoveries in the wake of financial crises with this revised chronology. We find that the regularity that recoveries are systematically slower in the aftermath of financial crises does not hold for the postwar United States. Historically, the pace of the expansion after recessions seems to reflect aggregate demand conditions