Report
Patrick Artus

The loss of GDP and the loss of cumulative GDP

Recessions obviously cause a loss in the level of GDP, during the recession and permanently, since after recessions, GDP can never catch up with the level it would have had without the recession. There is therefore a lasting loss of income that has to be shared between economic agents. There is therefore also a growing loss of cumulative GDP, since the GDP lost during a recession is never made up for. This implies a loss for the cumulative stock of savings, and therefore for the capital stock. And it is here that the amplifying mechanism appears since the lower capital stock leads to a lower level of potential GDP and therefore contributes to the loss in the level of GDP.
Provider
Natixis
Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

 

Analysts
Patrick Artus

Other Reports from Natixis

ResearchPool Subscriptions

Get the most out of your insights

Get in touch