shapes.pdf (application/pdf Object).
This paper provides an interesting statistical analysis regarding the potential shape of the economic recovery. Most likely, you've heard mention of U-shaped or V-shaped recoveries. The writer introduces an L-shaped recovery as well. He argues that while Models suggest a "traditional" V shaped recovery, the more likely scenario is an L-shaped recovery. This is so because of the financial crisis. The implication of the financial crisis is less leverage in the economy which translates to a slower recovery. Less access to available capital means less money to spend. We've argued the same scenario - we believe the reduction in leverage will persist for quite a while and will lead to a much slower and lower recovery than we've seen in the past.
This paper provides an interesting statistical analysis regarding the potential shape of the economic recovery. Most likely, you've heard mention of U-shaped or V-shaped recoveries. The writer introduces an L-shaped recovery as well. He argues that while Models suggest a "traditional" V shaped recovery, the more likely scenario is an L-shaped recovery. This is so because of the financial crisis. The implication of the financial crisis is less leverage in the economy which translates to a slower recovery. Less access to available capital means less money to spend. We've argued the same scenario - we believe the reduction in leverage will persist for quite a while and will lead to a much slower and lower recovery than we've seen in the past.
