Abstract

We propose a formal testing procedure to examine resilience of an economy. Our approach is applicable even when a cross-section of control group is unavailable and circumvents potential bias in time-series regressions using data that includes structural breaks. We provide measures of shock absorption and cumulative recovery. An empirical analysis reveals that most of the advanced countries were not resilient to the Global Financial Crisis, while many were so during the COVID-19 pandemic. Potential determinants of economic resilience such as financial leverage and labor market regulation may have negative correlations with these measures and other determinants have heterogenous associations depending on the nature of the crisis.