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The output cost of the global financial crisis: A reappraisal after ten years

Author(s): David Turner, Patrice Ollivaud

Date published: Jan 2019

SUERF Policy Note, Issue 53
By David Turner and Patrice Ollivaud, OECD


JEL-codes: E32, E44.
Keywords: Banking crisis, financial crisis, global financial crisis, potential output.

Abstract: Using pre-crisis extrapolations of GDP is likely to grossly exaggerate the output cost of the Global Financial Crisis as such trends were unsustainable. Evaluating the loss in comparison with pre-crisis trends in potential output, suggests that the median loss among OECD countries experiencing a bank crisis was still more than 6%, with this almost entirely accounted for by lower productivity, rather than lower employment. Much of the lower post-crisis productivity is in turn accounted for by lower growth in capital per worker, whereas declining tfp growth pre-dates the financial crisis.

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SUERF Policy Note, Issue 53SUERF Policy Note, Issue 53

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