Long Term Effects of the Great Recession Long Term Effects of the Great Recession

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October 18-19, 2011
Connolly Center, 4th Floor
Federal Reserve Bank of Boston
600 Atlantic Avenue
directions & visitor information

Recessions are normally assumed to be short-run fluctuations of output around a long-run equilibrium path. But the large size and long duration of the Great Recession has raised questions about its possible long-run effects.  Moving beyond the short-run analysis of the current economic situation, this conference will investigate potential long-term impacts of both the 2007-08 financial crisis and the economic downturn that followed. What structural economic changes have occurred during the Great Recession, and what are their implications? Each session of the conference focuses on long-term (beyond the recovery) or even permanent effects of the economic crisis within a specific arena.

Presentations and full agenda available here.


Tuesday, October 18

7:00 a.m.


8:15 a.m.

Conference Commencement & Welcome

  Eric S. Rosengren
President and Chief Executive Officer
Federal Reserve Bank of Boston
  The morning sessions will be moderated by Mary Burke, Senior Economist, Federal Reserve Bank of Boston
8:30 a.m.

The Statistical Behavior of GDP after Financial Crises and Severe Recessions

Do severe recessions associated with financial crises leave permanent scars on the economy? The opening session will set the stage for the conference by discussing the statistical evidence on long-term effects of these economic setbacks, looking across nations as well as historically in the United States.  Do these setbacks cause large and permanent reductions in aggregate GDP relative to previous trends?  If economies eventually recover back to trend, how long do these recoveries typically take?


David H. Papell
Joel W. Sailors Endowed Professor of Economics
University of Houston

Ruxandra Prodan
Clinical Assistant Professor of Economics
University of Houston

Paper pdf

See also: authors' contributions on Econbrowser:
“The Great Slump is Not Yet Half Over” offsite



Jeremy Piger
Associate Professor of Finance
University of Oregon

James Stock
Harold Hitchings Burbank Professor of Political Economy
Harvard University

10:00 a.m.


10:30 a.m.

The Economic Implications of Shifts in Attitudes after the Great Recession

Using social surveys, some economists have found that cohorts who live through difficult economic times adopt specific attitudes towards risk and other economic variables over their lifetimes. What does this research imply for long-term economic trends? Will the severe recession make people save more over their entire lives, or alternatively, will the portfolio preferences of savers change after the crisis – will they save more in less risky assets?  Are the potential shifts in economic attitudes large enough to have long-term impacts on the macroeconomy?


Anat Bracha
Federal Reserve Bank of Boston

Julian Jamison
Senior Economist
Federal Reserve Bank of Boston

Paper pdf


Stefan Nagel
Associate Professor of Finance
Stanford University

Antonio Spilimbergo
International Monetary Fund

12:00 p.m.


1:15 p.m. Keynote Address:

The Honorable Ben S. Bernanke
Board of Governors of the Federal Reserve System

Remarks offsite

  The afternoon sessions will be moderated by Jeff Fuhrer, Executive Vice President and Senior Policy Advisor, Federal Reserve Bank of Boston
2:00 p.m.

The Effects of the Great Recession on the U.S. Labor Market

How will the Great Recession alter the long-term quantity and distribution of human capital across individuals, demographic groups, and birth cohorts in the United States?  There is some evidence that severe recessions place younger cohorts at an economic disadvantage—regarding employment and earnings prospects—for the rest of their lives. Should these concerns be relevant for young people today and do they have implications for the NAIRU?  Additionally, what do the wage experiences of displaced workers imply for the lifetime earnings of today’s unemployed? What are the effects on long-term labor market flows and earnings trends of the negative shock to job tenure (for all age groups) caused by the Great Recession? What do we know about the interaction of labor market institutions and hysteresis, and have U.S. labor market institutions become more or less flexible (long-term) as a result of the Great Recession?


William T. Dickens
Distinguished Professor of Economics and Social Policy
Northeastern University

Robert K. Triest
Vice President and Economist
Federal Reserve Bank of Boston

Paper pdf


Gary Burtless
John C. and Nancy D. Whitehead Chair in Economic Studies
The Brookings Institution

Bart Hobijn
Senior Research Advisor
Federal Reserve Bank of San Francisco

3:30 p.m.


4:00 p.m

A New World for the Housing Market and the GSEs

Housing obviously played a large part in the financial crisis, but no one is sure how the housing market will or should change in the future. Recently, the Obama Administration offered reform alternatives for the largest players in the housing market---the Government Sponsored Entities (GSEs), Fannie Mae and Freddie Mac. This session will discuss GSE reform within the wider context of the appropriate government role in housing finance. Are Fannie and Freddie needed to ensure a well-functioning housing market or did they help create the moral hazard problems that contributed to the recent crisis? Would winding them down to create a mostly private system of housing finance affect the types of mortgages that Americans use, reduce homeownership among particular groups, or make the housing-finance system more vulnerable to adverse economic shocks? What can we infer from other nations’ institutions, policy approaches, and experiences?


Phillip L. Swagel
Professor in International Economic Policy
University of Maryland

Paper pdf


Deborah J. Lucas
Professor of Finance
Massachusetts Institute of Technology

Susan M. Wachter
Richard B. Worley Professor of Financial Management; Professor of Real Estate and Finance
The Wharton School of the University of Pennsylvania

5:30 p.m. Reception & Dinner

Wednesday, October 19

7:00 a.m.


8:30 a.m. Conference Address:

Eric S. Rosengren
President and Chief Executive Officer
Federal Reserve Bank of Boston


  The sessions will be moderated by Martin Feldstein, George F. Baker Professor of Economics, Harvard University
9:00 a.m.

Fiscal Policy as a Stabilization Tool

After years on the sidelines, countercyclical fiscal policy made a comeback during the Great Recession. Federal stimulus dollars provided direct help for the unemployed and other affected groups, aid for state and local governments struggling under balanced-budget requirements, tax cuts to individuals and businesses, and support for public investments. Did the Great Recession teach us anything about the effectiveness of fiscal policy as a stabilization tool? Did some types of stimulus have more “bang for the buck” than others, or add more effectively to the public capital stock?  And what is the future for countercyclical fiscal policy, in light of the ongoing concern about the federal budget deficit?


Antonio Fatás
Portuguese Council Chaired Professor of European Studies, Professor of Economics

Ilian Mihov
Dean of Research, Professor of Economics, and The Novartis Chair of Management and Environment

Paper pdf


Silvia Ardagna
Senior European Economist
Bank of America Merrill Lynch

Gauti B. Eggertsson
Research Officer
Federal Reserve Bank of New York

10:30 a.m.


11:00 a.m.

Panel Discussion:  Will the Federal Reserve Be Able to Serve as Lender of Last Resort in the Next Financial Crisis?

Like many central banks, the Federal Reserve functions as a lender of last resort. In particular, the Fed’s emergency lending programs played a key role in maintaining liquidity during the worst of the recent financial crisis. Yet the Fed’s lending powers have been curtailed by the Dodd-Frank Act. Will the removal of 13(3) lending authority make financial markets less stable, or will the new restrictions be internalized by forward-looking traders? And how are the Fed’s new responsibilities for systemic regulation affected by the new emergency-lending limitations?


james segel videoJames Segel
Smith, Segel, Ruddock & Hayes

simon johnson videoSimon Johnson
Ronald A. Kurtz (1954) Professor of Entrepreneurship
Massachusetts Institute of Technology

donald kohn videoDonald Kohn
Senior Fellow
The Brookings Institution
Comments pdf

panel videoQ&A Discussion
Part 1
Part 2

12:30 p.m.


2:00 p.m Conference Adjournment