The 2001 recession in the United States began in March 2001 and lasted until Nov

Question

The 2001 recession in the United States began in March 2001 and lasted until November 2001. In contrast to the typical business cycle in the United States, the recovery following the 2001 recession is viewed as a "jobless recovery."

(a) Briefly define the terms recession and recovery. Finally, why was the 2001 recovery in the United States viewed as a "jobless" recovery? Supplement your discussion with the data on employment and payrolls during the 2001 Recession and accompanying recovery.

(b) A number of economists have suggested that the nature of the business cycle in the United States may be changing. That is, "jobless recoveries" are not going to be unusual anymore -- the nature of the business cycle in the modern, technology-driven economy is different now than other times.

Using a rigorous model of production and labor market behavior, formally demonstrate how productivity could lead to a recovery that occurs without an increase in employment. In fact, it may also be associated with higher unemployment rates. Use detailed graphical analysis.

Explanation / Answer

Recession refers to a period of short-term economic decline in which trade and business activity is reduced, usually recognized by a fall in GDP in two consecutive quarters.

Recovery is a period in economic cycle following a recession, in which GDP growth

A "jobless recovery" is an economic growth in a country, but employment levels either fall or remain stable.

Due to following reasons, 2001 recovery in the United States viewed as a "jobless" recovery-

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