Recession

Summary

In economics, a recession is a business cycle contraction that occurs when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock, the bursting of an economic bubble, or a large-scale anthropogenic or natural disaster (e.g. a pandemic). In the United States, a recession is defined as "a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales." The European Union has adopted a similar definition. In the United Kingdom, a recession is defined as negative economic growth for two consecutive quarters. Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as in

Official source

https://en.wikipedia.org/wiki/Recession

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Are the Innovation Needs of Low-Technological Small and Medium-Sized Enterprises in Line with Knowledge Production by Research Institutions?

Camille Marguerite Aouinait

Small agricultural firms have to cope with increasing economic, legal and environmental difficulties. The purpose of the paper is to identify whether there are available research outputs to these challenges, focusing on the Swiss traditional fruit sector. Identification of firms' needs using face-to-face interviews and a focus group allowed us to prioritize innovations. Knowledge and innovation transfer gaps were identified thanks to bibliometric analysis, providing hints for research program orientations. The main sectoral needs were related to varieties like increasing pest and disease resistance, weather sensitivity, and ripening behavior. Knowledge produced by research institutions was partly related to the firms' needs. The study demonstrated a need for better coordination between agricultural stakeholders and researchers. Knowledge must be transferred and shared in the network with greater efficiency by extending interactions and involving stakeholders earlier in the innovation process. However, the search for scientific outputs should include more specificities of the local environment.

DE BOECK UNIV2019

Mortgage Default in an Estimated Model of the U.S. Housing Market

Luisa Lambertini, Victoria Nuguer, Pinar Uysal

This paper models the housing sector, mortgages and endogenous default in a DSGE setting with nominal and real rigidities. We use data for the period 1981-2006 to estimate our model using Bayesian techniques. We analyze how an increase in risk in the mortgage market raises the default rate and spreads to the rest of the economy, creating a recession. In our model two shocks are well suited to replicate the subprime crisis and the Great Recession: the mortgage risk shock and the housing demand shock. Next we use our estimated model to evaluate a policy that reduces the principal of underwater mortgages. This policy is successful in stabilizing the mortgage market and makes all agents better off. (C) 2017 Elsevier B.V. All rights reserved.

2017

We examine austerity in advanced economies since the Great Recession. Austerity shocks are reductions in government purchases that exceed reduced-form forecasts. Austerity shocks are statistically associated with lower real GDP, lower inflation and higher net exports. We estimate a cross-sectional multiplier of roughly 2. A multi-country DSGE model calibrated to 29 advanced economies generates a multiplier consistent with the data. Counterfactuals suggest that eliminating austerity would have substantially reduced output losses in Europe. Austerity shocks were sufficiently contractionary that debt-to-GDP ratios in some European countries increased as a consequence of endogenous reductions in GDP and tax revenue

NBER2017