Posted by Franklin Allen (Imperial College London), Elena Carletti (Bocconi University), and Yaniv Grinstein (IDC Herzliya), on Tuesday, March 6, 2018
Editor's Note: Franklin Allen is Professor of Finance and Economics at Imperial College London; Elena Carletti is Professor of Finance at Bocconi University; and Yaniv Grinstein is Associate Professor of Finance at IDC Herzliya. This post is based on their recent paper.
One of the interesting features of the 2008 financial crisis is the wide range of relationships between changes in a country’s output and changes in unemployment. Spain and Ireland had very large increases in unemployment despite quite different falls in output. This is perhaps not very surprising because both had significant construction industries that were devastated by the bursting of the property bubbles in both countries. More surprising is the fact that countries like Germany and Japan had much larger drops in output than the US but the effect on their unemployment rates was small.
