The Post-Crisis Slump in the Euro Area and the US

This note discusses the drivers of the persistent post-crisis slump in the Euro Area (EA) and the US, and it gives a brief overview of the research literature that studies the slump. The note argues that financial shocks were key determinants of the 2008-09 Great Recession, for both the EA and the US. The post-2009 slump in the EA mainly reflects a combination of adverse aggregate demand and supply shocks, in particular lower productivity growth, and persistent adverse shocks to capital investment, linked to the poor health of the EA financial system. Adverse financial shocks were less persistent for the US