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Saturday, May 23, 2009

Creditless recovery?

According to the research by Claessens, Kose and Torrones, economic recoveries can happen even without recoveries in credit market and house prices.

The observation can be summarized in the graph below:



One source of such recovery is consumption. But given that consumption is unlikely to have a quick rebound in this recession, they conclude that even economic recovery is possible, it will be slow and shallow.

Read the report of the research here.