Truly honored to present our NBER Working Paper, written with Joshua Aizenman, Hiro Ito, Donghyun Park, and Gazi Salah Uddin at the Central Bank of the Republic of Türkiye during a research webinar on Tuesday 17 February 2026. I am extremely grateful to Ufuk Can and Vuslat Us for the invitation. Stay tuned for more information.
Global Shocks, Institutional Development, and Trade Restrictions: What Can We Learn from Crises and Recoveries Between 1990 and 2022?
The Global Financial Crisis and the COVID-19 pandemic were two major shocks to the world economy in the 21st century. In this study, we analyze the patterns of recessions and recoveries of 101 advanced and developing economies. We identify the turning points of recessions and expansions between 1990 and 2022, and perform cross-country analysis of domestic and external drivers of economic recovery. In addition to the standard independent variables, we include institutional development, political stability, the extent of democracy, and trade restrictions indexes, and explore their roles in explaining recessions and recovery patterns. For the whole sample, we find that deeper recessions are followed by stronger recoveries, in line with Friedman’s plucking model of the business cycle. However, the empirical evidence for the plucking model becomes weaker if institutional development is limited and trade restrictions are high. We show that recessions that create conflict and trade tensions differ sharply from those that do not, a highly relevant finding in the current global climate of heightened trade tensions and geopolitical uncertainty. Finally, since developing countries tend to have weaker institutions and higher trade barriers, our evidence suggests that if policy-makers seek to cushion global shocks, they will need to rely on countercyclical monetary and fiscal policy. Implementation of such policies is generally facilitated by robust and credible monetary and fiscal policy frameworks.
My research has been presented in several central bank settings over the recent period, reflecting sustained engagement with policy-relevant empirical work: at the Bank of Thailand in May 2024 (during the ABD-PIER conference), the Bank of France in October 2024 (during a visiting scholar appointment), the European Central Bank in November 2024 (ECB research seminar of the Euro Area External Sector and Euro Adoption Division in the Directorate General Economics), the Bank of Finland in April 2025 (BOFIT research seminar during a visiting scholar appointment), the Bank of Korea in August 2025 (during the ABD-JIMF-BOK conference and a research seminar), the Bank of Israel (during the VIMM webinar) in September 2025, and the Bank of Latvia in October 2025 (research seminar).
Two other seminars are planned in January 2026; one in the National Bank of Slovakia and the Bank of England. Stay tuned for more information.