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Rosenblum How Bad Was It

Rosenblum How Bad Was It

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Published by: caitlynharvey on Jul 30, 2013
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No. 20 • July 2013
Staff Papers
How Bad Was It?
The Costs and Consequencesof the 2007–09 Financial Crisis
 by Tyler Atkinson, David Luttrell  and Harvey Rosenblum
Staff Papers
is published by the Federal Reserve Bank of Dallas. The views expressed are those of the authors and should not be attributed to the Federal Reserve Bank of Dallas or the Federal Reserve System. Articles may be reprinted if the source is credited and the Federal Reserve Bank of Dallas is provided a copy of the publication or a URL of the website with the material. For permission to reprint or post an article, email the Public Affairs Department at dal.webmaster@dal.frb.org.
Staff Papers
is available free of charge by writing the Public Affairs Department, Federal Reserve Bank of Dallas, P.O. Box 655906, Dallas, TX 75265-5906; by fax at 214-922-5268; or by phone at 214-922-5254. This publication is available on the Dallas Fed website, www.dallasfed.org.
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No. 20, July 2013
How Bad Was It? The Costs and Consequencesof the 2007–09 Financial Crisis
Tyler Atkinson 
Senior Research Analyst
David Luttrell 
Senior Economic Analyst andSpecial Assistant to the President
Harvey Rosenblum 
Executive Vice President andDirector of Research
The 2007–09 …nancial crisis was associated with a huge loss of economic output and …nancial wealth,psychological consequences and skill atrophy from extended unemployment, an increase in governmentintervention, and other signi…cant costs. Assuming the …nancial crisis is to blame for these associated ills,an estimate of its cost is needed to weigh against the cost of policies intended to prevent similar episodes. Weconservatively estimate that 40 to 90 percent of one year’s output ($6 trillion to $14 trillion, the equivalentof $50,000 to $120,000 for every U.S. household) was foregone due to the 2007–09 recession. We also provideseveral alternative measures of lost consumption, national trauma, and other negative consequences of theworst recession since the 1930s. This more comprehensive evaluation of factors suggests that what the U.S.gave up as a result of the crisis is likely greater than the value of one year’s output.
 JEL codes:
E65, G01
Financial crisis, Great Recession, output loss
The views expressed in this article are those of the authors and do not necessarily re‡ect the views of the Federal Reserve Bankof Dallas or the Federal Reserve System.

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