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The world economy has come a long way since the global financial crisis a decade ago that infected all major financial markets and set off a global recession. Unconventional mone-tary policy and expansionary fiscal policy helped the advanced economies to slowly get back on their feet, although the specter of deflation has only recently been vanquished. Emerging market economies survived the initial phase of the crisis in better shape, bol-stered by a surge of investment-driven growth in China. Many of these economies have fal-tered in recent years, even as the advanced economies gradually settle into stable growth trajectories. Many countries have undertaken important reforms to financial, labor, and product markets, although these have generally fallen short of the deep-rooted structural reforms necessary to durably bolster productivity and output growth.
This note evaluates the progress made by key advanced and emerging market economies since the financial crisis in several dimensions. Cross-country comparisons reveal a few surprising results that go against the grain of conventional narratives. For instance, de-spite a sharp fall in the unemployment rate and bullishness about American employment growth, the U.S. employment rate still remains below pre-crisis levels. Meanwhile, the em-ployment rates of other major advanced economies have risen significantly. There are also some important disconnects between the performance of equity markets and macroeco-nomic variables such as GDP, both within advanced economies and between advanced and emerging market economies. While a great deal of progress has been made in repair-ing financial and labor markets, the limited and incomplete nature of structural reforms in many economies leaves open the possibility that financial pressures and macroeconomic stresses could be lurking under the surface.
10 Years After the Financial Crisis Uneven Progress and Some Structural DisconnectsKarim Foda and Eswar Prasad*
September 2018
* Foda is a former associate fellow at Brookings. Prasad is a professor in the Dyson School at Cornell University, a senior fellow at the Brookings Institution, and a research associate at the National Bureau of Economic Research.
90
95
100
105
110
115
120
Advanced
France Germany Japan UK US
90
110
130
150
170
190
210
230
Emerging
Brazil China India Russia
90
95
100
105
110
115
Advanced
France Germany Japan UK US
90
110
130
150
170
190
210
230
Emerging
Brazil China India Russia
94
96
98
100
102
104
Advanced
France Germany Japan UK US
90
92
94
96
98
100
102
104
106
Emerging
Brazil China Russia
20
40
60
80
100
120
140
160
180
200
Advanced
France Germany Japan UK US
20
40
60
80
100
120
140
160
180
200
Emerging
Brazil ChinaIndia RussiaU.S. (for reference)
75
80
85
90
95
100
105
110
115
120
Advanced
France Germany Japan UK US
80
100
120
140
160
180
200
220
240
260
280
Emerging
Brazil China India Russia
75
85
95
105
115
125
135
145
Advanced
France Germany Japan UK US
60
100
140
180
220
260
300
340
Emerging
Brazil China India Russia
0.0
0.5
1.0
1.5
2.0
2.5
Advanced France Germany Japan UK US
Advanced2000-2006
2011-2017
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
Emerging &
Developing
Brazil China India Russia
Emerging2000-2006
2011-2017
90
95
100
105
110
115
Employment Index, Advanced
France Germany Japan UK US
90
95
100
105
110
115
Employment-to-WAP Index, Advanced
France Germany Japan UK US
-3
-2
-1
0
1
2
3
4
5
6
Advanced
France Germany Japan UK US
-5
0
5
10
15
20
Emerging
Brazil China India Russia
0
50
100
150
200
250
Japan US France UK Brazil India Germany China Russia
Gross Public Debt-to-GDP
(percent)
2007
2017
20
30
40
50
60
70
80
90
100
110
Government Credit-to-GDP
(percent)
Advanced Emerging Markets
China EMs excl. China
60
80
100
120
140
160
180
200
220
Private Sector Credit-to-GDP
(percent)
Advanced Emerging Markets
China EMs excl. China
60
70
80
90
100
110
120
130
140
150
Advanced
France Germany Japan UK US
50
100
150
200
250
300
350
400
Emerging
Brazil China India Russia
60
70
80
90
100
110
120
130
140
150
Advanced
France Germany Japan UK US
50
100
150
200
250
300
350
400
Emerging
Brazil China India Russia
90
95
100
105
110
115
120
Advanced
France Germany Japan UK US
90
110
130
150
170
190
210
230
Emerging
Brazil China India Russia
60
70
80
90
100
110
120
130
140
150
160
Advanced
euro yen pound sterling
60
70
80
90
100
110
120
130
140
150
160
170
180
190
200
Emerging
Brazilian real renminbi Indian rupee
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Advanced
France Germany Japan UK US
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
0.4
0.6
0.8
1.0
1.2
1.4
1.6
Em
ergin
g
Advan
ced
Advanced Emerging
2
3
4
5
6
7
8
9
10
11
Advanced
France Germany Japan UK US
3
5
7
9
11
13
15
Emerging
Brazil China India Russia
