Thursday, June 4, 2009

The Recession--A Who's Who

Think that France has fared better than the US in the recession? Think that Europe has done relatively well? See the graphic above. (h/t Ezra Klein)


Unknown said...

And the EU has no budget to speak of, and the ECB was late in recognizing the crisis...No wonder electors can't be bothered about e(E)uropean elections.

Alex said...

I think it is well known that the US has not overall particularly suffered from the recession. After all, the Chinese are still buying US bonds. That is what the graph really says.

A lot of countries have suffered heavily, including many not on the graph. France should be compared to them, not to the US.

Leo said...

What's really striking is that, with the exception of mysterious Italy, this ranking is inversely correlated with these countries' trade balances.

What started as a financial crisis quickly evolved into a trade crisis which has obviously had a much bigger impact on exporting countries. Clearly, significantly different fiscal and monetary policies helped increase the difference, but I am not sure they are the clincher.

As a kitchen economist, I would appreciate receiving comments on this from the distinguished readers of this blog.

Leo said...

The FT's Martin Wolf has some much better informed arguments on this:

Leo said...

One last take on this.

The original piece from which this table was extracted brings and unusual and intriguing geographic twist to the analysis:

Unknown said...

Leo, Thanks for the interesting question and interesting answers. I would point out one additional thing that Wolf leaves out: the spectacular Russian collapse is due to the collapse in oil prices, which in turn is due to falling worldwide demand. Oil prices have already begun to turn up, however. Japan is more like Germany, an exporter of durable goods, but it has been hurt by a falling yen, caused by the collapse of the carry trade (borrowing in low-interest countries, of which Japan was one, to invest in high-interest countries; this was cut off when the financial crisis hit).