TY - JOUR
T1 - How can recessions be brought to an end? Effects of macroeconomic policy actions on durations of recessions
AU - Taş, Bedri Kamil Onur
AU - Cunedioǧlu, Hüseyin Ekrem
PY - 2014/5
Y1 - 2014/5
N2 - This paper analyzes how effective macroeconomic policy actions are in ending recessions. We also investigate which structural factors help the country to experience shorter recessions. We implement survival regression analysis and conclude that expansionary monetary policy significantly decreases durations of recessions whereas fixing the exchange rate does not have an effect on the durations of recessions. Expansionary fiscal policy has undesired effects and decreases the probability that recession will end, thus increasing the durations of recessions. The analysis of country specific factors indicates that emerging countries experience shorter recessions. Recessions in countries with higher trade openness last significantly longer. Financial openness and institutional quality do not have significant effects of recession durations. The empirical analysis takes into account alternative probability distributions and endogeneity of policy actions.
AB - This paper analyzes how effective macroeconomic policy actions are in ending recessions. We also investigate which structural factors help the country to experience shorter recessions. We implement survival regression analysis and conclude that expansionary monetary policy significantly decreases durations of recessions whereas fixing the exchange rate does not have an effect on the durations of recessions. Expansionary fiscal policy has undesired effects and decreases the probability that recession will end, thus increasing the durations of recessions. The analysis of country specific factors indicates that emerging countries experience shorter recessions. Recessions in countries with higher trade openness last significantly longer. Financial openness and institutional quality do not have significant effects of recession durations. The empirical analysis takes into account alternative probability distributions and endogeneity of policy actions.
KW - Duration analysis
KW - Macroeconomic policy
KW - Recession
UR - http://www.scopus.com/inward/record.url?scp=84902078149&partnerID=8YFLogxK
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U2 - 10.1016/S1514-0326(14)60008-8
DO - 10.1016/S1514-0326(14)60008-8
M3 - Article
AN - SCOPUS:84902078149
SN - 1514-0326
VL - 17
SP - 179
EP - 198
JO - Journal of Applied Economics
JF - Journal of Applied Economics
IS - 1
ER -