@Alon @SteveRoth @jamisonnbishop @ryanlcooper I’m very sympathetic to “hysteresis” arguments that suggest the long-term effect of recessionary economies is sluggish demand, lower growth and productivity that might have emerged in a “run the economy hot” counterfactual, where people would spend more securely and full employment / rising wages create incentives for labor-augmenting innovation.

@Alon @SteveRoth @jamisonnbishop @ryanlcooper There’s just a very mechanical short-term effect. Business’ capacity to produce does not fall linearly with the marginal workers fired. So the immediate effect of a recession is a productivity increase, once demand comes back towards capacity. I don’t at all claim it’s a good thing overall.