Replication data for: Inspecting the Mechanism: Leverage and the Great Recession in the Eurozone

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Project Citation:

Martin, Philippe, and Philippon, Thomas. Replication data for: Inspecting the Mechanism: Leverage and the Great Recession in the Eurozone. Nashville, TN: American Economic Association [publisher], 2017. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E113065V1

Project Description

Summary: We provide a comprehensive account of the dynamics of eurozone countries from 2000 to 2012. We analyze private leverage, fiscal policy, labor costs, and spreads, and we propose a model and an identification strategy to separate the impact of credit cycles, excessive government spending, and sudden stops. We then ask how periphery countries would have fared with different policies. We find that countries could have stabilized their employment if they had followed more conservative fiscal policies during the boom. Macroprudential policies and an early intervention by the central bank to prevent market segmentation and reduce fiscal austerity would also have significantly reduced the recession.

Scope of Project

JEL Classification:
      E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
      E32 Business Fluctuations; Cycles
      E58 Central Banks and Their Policies
      E62 Fiscal Policy
      F33 International Monetary Arrangements and Institutions
      F42 International Policy Coordination and Transmission
      H61 National Budget; Budget Systems

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Published Versions

V1 [2019-10-12]

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