San Francisco paper studies effect of crisis on potential output
A working paper, released today (September 28) by the Federal Reserve Bank of San Francisco, said a pre-recession slowdown in underlying technology growth should not be mistaken for a permanent effect of the crisis.
The author, John Fernald, said the slow growth in potential output experienced during recession can be explained by a drop-off in underlying technology growth and "sharply reduced" capital growth.
While capital formation is cyclical, and should rebound with economic recovery, the
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