Seven years of “bad times” may lie ahead for the U.S. economy as it recovers from the financial crisis that started in 2007, according to Robert Shiller, an economist at Yale University.
Shiller made his estimate in a commentary two days ago. He drew the conclusion from the work of economists Carmen Reinhart and Vincent Reinhart in “After the Fall,” a paper presented at the Federal Reserve’s annual symposium last month.
Shiller cited gross domestic product per capita and unemployment. The figures are compiled by the International Monetary Fund and the Labor Department, respectively, and the jobless rates are year-end percentages.
Unemployment in developed countries is about five percentage points higher on average in the decade following financial crises than in the preceding 10 years, according to the Reinharts’ paper.
GDP per capita declines by an average of about 1 percent a year in real terms, adjusted for inflation, the study showed.
This gauge fell 3.3 percent in the U.S. last year after a 0.5 percent drop in 2008, according to the IMF’s data.
“If you allow a financial market to spin wildly until it breaks down, it really does seem that you run the risk of years of economic malaise,” Shiller wrote in his commentary, posted on the Project Syndicate website. “That is the historical pattern.”
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