51. Crises Do Not Cause Lower Short-Term Growth
- Author
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Hou, Kaiwen, Hou, David, Ouyang, Yang, Zhang, Lulu, and Liu, Aster
- Subjects
Economics - Econometrics - Abstract
It is commonly believed that financial crises "lead to" lower growth of a country during the two-year recession period, which can be reflected by their post-crisis GDP growth. However, by contrasting a causal model with a standard prediction model, this paper argues that such a belief is non-causal. To make causal inferences, we design a two-stage staggered difference-in-differences model to estimate the average treatment effects. Interpreting the residuals as the contribution of each crisis to the treatment effects, we astonishingly conclude that cross-sectional crises are often limited to providing relevant causal information to policymakers., Comment: 12 pages, 3 figures, 5 regressions, 1 conclusion
- Published
- 2022