01890cas a2200265 a 4500 AALejournalIMF020816 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513536996 1018-5941 BD-DhAAL BD-DhAAL Cerra, Valerie. Hysteresis and Business Cycles / Valerie Cerra, A. Fatas, Sweta Saxena. Washington, D.C. : International Monetary Fund, 2020. 1 online resource (50 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Traditionally, economic growth and business cycles have been treated independently. However, the dependence of GDP levels on its history of shocks, what economists refer to as 'hysteresis,' argues for unifying the analysis of growth and cycles. In this paper, we review the recent empirical and theoretical literature that motivate this paradigm shift. The renewed interest in hysteresis has been sparked by the persistence of the Global Financial Crisis and fears of a slow recovery from the Covid-19 crisis. The findings of the recent literature have far-reaching conceptual and policy implications. In recessions, monetary and fiscal policies need to be more active to avoid the permanent scars of a downturn. And in good times, running a high-pressure economy could have permanent positive effects. Mode of access: Internet Fatas, A. Saxena, Sweta. IMF Working Papers; Working Paper ; No. 2020/073 Full text available on IMF http://elibrary.imf.org/view/journals/001/2020/073/001.2020.issue-073-en.xml IMF e-Library