Related to the Making the Connection] Carmen Reinhart and Kenneth Rogoff have ar
ID: 1104716 • Letter: R
Question
Related to the Making the Connection] Carmen Reinhart and Kenneth Rogoff have argued that the 2007-2009 financial crisis explains not just the severity of the accompanying recession but also the slowness of the subsequent recovery Michael Bordo oaf nhart and Rogoffs argument is incorrect Instead, he argues that the slow recovery was due to the unprecedented housing bust and "uncertainty over changes in fiscal and regulatory policy Source: Michael Bordo, "Financial Recessions Don't Lead to Weak Recoveries,"Wall Street Joumal, September 27, 2012 f you were attempting to evaluate the relathve merits of Reinhart and Rogoffs and Bordo's arguments,what type of evidence would you look at? 0 A. The historic impact of a financial crisis on the severity of a recession O B. The causes of past recessions and how long t took to recover from them C. The historic impact of a housing crisis on the severity of a recession. D. Allofthe above ins It is that you could definilively identify the causes of the slow recovery since OA. rothely the ushasa con plicated fnarcialystem hatine tined with te housing market which makes hing the impact of a single factor very difficult instr B. ikely we now have sophisticated models that let us separate te impacts from a variety of variables wth complete certamy O c not tkely there will only be data available relating to the causes of the crisis not related to the recovery 0 D. Skely tho a slow recovery gives researchers mare tirne to try to identify the causes MGMT Type here to searchExplanation / Answer
We will try to look at all of the above historic impacts. We have to look at historic impact of financial crisis on severity of a recession, causes of past recession and how long it took to recover from them and impact of a housing crisis on the severity of recession.
It is not likely that you could definitively identify the causes of the slow recovery since the US has a complicated financial system that is intertwined with the housing market which makes which makes finding the impact of a single factor very difficult.