The Cost of Recessions Revisited: A Reverse-Liquidationist View / Ricardo J. Caballero, Mohamad L. Hammour.

Format:

Book

Author/Creator:

Caballero, Ricardo J.

Contributor:

National Bureau of Economic Research.

Hammour, Mohamad L.

Series:

Working Paper Series (National Bureau of Economic Research) no. w7355.

NBER working paper series no. w7355

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The Cost of Recessions Revisited

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1999.

Summary:

The observation that liquidations are concentrated in recessions has long been the subject of controversy. One view holds that liquidations are beneficial in that they result in increased restructuring. Another view holds that liquidations are privately inefficient and essentially wasteful. This paper proposes an alternative perspective. Based on a combination of theory and empirical evidence on gross job flows and on financial and labor market rents, we find that, cumulatively, recessions result in reduced restructuring, and that this is likely to be socially costly once we consider inefficiencies on both the creation and destruction margins.

Notes:

Print version record

September 1999.