= 27d567bc2d48d9f40e9ccc20ea370b15)
jsalvatier comments on Mathematicians and the Prevention of Recessions - Less Wrong
You are viewing a comment permalink. View the original post to see all comments and the full post content.
= 783df68a0f980790206b9ea87794c5b6)
Loading…= b715d02e85f7b3b4ae65ca3d3e450868)
Subscribe to RSS Feed
Powered by Reddit
= f037147d6e6c911a85753b9abdedda8d)
You are viewing a comment permalink. View the original post to see all comments and the full post content.
Comments (131)
Bubble != recession
Sufficiently large bubble popping ~= recession.
What if underlying structural issues put you into a very long term recession which only bubbles give the temporary appearance of rising out of...
Then in that case I'd advise reducing regulation, building nuclear power plants, and having more children.
Certainly it is common for bubbles to lead to recessions, but with good monetary policy, it does not need to.
Do you have any good real-world examples of this happening?
I don't off hand, but I also haven't investigated this thoroughly. My understanding is that one of the stock crashes in the 20s lead to no recession, but I'm not finding the post I read.
Here's the DJIA for 1920-1940: http://stockcharts.com/freecharts/historical/djia19201940.html
The only real crashes were 1921, which was mid-recession, 1929-33, which was caused by the Depression getting under way, and 1937, which was mid-Depression.
1987 is the example typically offered by propotents of that position.
For all the sound and fury at the time, it wasn't all that big a bubble. The trough was only barely a 52-week low - the Dow closed Black Monday at 1739, the previous 52-week low was 1808, and by Wednesday it was back up over 2000. (Admittedly, it did keep bouncing around for a while).