Category Archives: recession

History Warns Us to Avoid a W-shaped Recession

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May 3, 2020 — “Those who do not study history are condemned to repeat it.”  And the rest of us are condemned to repeat George Santayana.

Will the Coronavirus Recession of 2020 be V-shaped?  Or U-shaped?  If we fail to heed the lessons of history it is likely to be W-shaped, with incipient recovery followed by successive relapses into sickness and recession.

As has been widely noted, we would have been better prepared to cope with the Covid-19 pandemic in the first place if everyone had paid more attention to the past history of epidemics. Be that as it may, the world is now deep into the pandemic and its economic consequences, the most severe such events since the interwar period, 1918-1939.  As decision-makers in every country contemplate their next steps, they would do well to ponder the precedents of that interwar period. read more

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Is the coronavirus recession of 2020 unprecedented?

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April 8, 2020 — A reporter asks: Can this situation be compared to the Great Depression? Or any other historical parallel that you can refer to?

My answer: The coronavirus recession this year is set to be worse than the Great Recession of 2007-09, is unprecedented in its suddenness, and is likely to show the deepest economic trough since the Great Depression of the 1930s.  The most natural precedent is the global influenza pandemic of 1918-20, which has been estimated to have caused negative growth of 6% in the typical country, in a recent paper by Robert Barro, Jose Ursua, and Joanna Weng. read more

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Interview on the Coronavirus Recession

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Interview by Economychosun, South Korea, March 24, 2020

  1. Q: I’d like to know your opinion on the global economic impact of the Covid-19 crisis.  Do you think the recession is a fait accompli?

JF: We are already in a global recession, even though it will take a bit longer for the most relevant economic statistics to confirm that. It is exceedingly rare that economists can make such a pronouncement in real time with any degree of confidence. But it is clear enough in this case.

  1. Q: How long do you think the recession will last? How big would be the recession impact?

JF: The onset of the recession is very rapid, by historical standards.  The loss in output will probably be deep. However, it is not inevitable that the recession should last a long time.  If countries are able to fight the coronavirus with very aggressive public health measures — as some East Asian countries have done — so that the rate of infections peaks later this year, there could be a V-shaped recovery. read more

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