An Analysis of Peter Coy's 'The Great Recession: An Affair to Remember'
604 Words2 Pages
In his article "The Great Recession: An Affair to Remember", Peter Coy asserts two things. The first is that the great recession has gone on longer than necessary as the result of faulty fiscal and monetary policy; and the second is that the Great Recession will eventually end with a boom in the US economy.
The article covers a number of key concepts in macroeconomics. The first is the idea of the recession, something that Coy discusses at length in the article. We notes that the recession cam e as the result of a real estate bubble that stoked consumer spending. The author notes that the recession ended in 2009 when the economy stopped contracting, but that growth since then has been slow and as a result the economy is below the trendline, so it is underperforming the level where it should be. The author does not note if that trendline was adjusted for the bubble or if it accepts the bubble as being a reasonable contributor to the trendline while the recession is not.
The US economy is in a state of monopolistic competition in most industries, where companies compete for consumer dollars based on different types of differentiation. Consumers are willing to spend on differentiated products, and their spending patterns are in part dictated by the abilities of companies to sell attractive goods at attractive prices. The main driver of demand for the US economy during the bubble was consumer spending. It was consumer spending that declined with the recession, since the