Figure 17-2 tracks the unemployment rate in the years before and after the Panic of 1893 in the United States, the banking crisis of 1991 in Sweden, and the American financial crisis of 2008.

a. In Figure 17-2, how many years after the Panic of 1893 did unemployment peak in the United States?

b. In Figure 17-2, how many years after the banking crisis of 1991 did unemployment peak in Sweden?

c. In Figure 17-2, how many years after the banking crisis of 2008 did unemployment peak in the United States?

Figure 17-2

Transcribed Image Text:

This figure tracks unemployment in the wake of three banking crises: the Panic of 1893, the Swedish banking crisis of 1991, and the American financial crisis of 2008. t represents the year of the crisis-1893 for the Panic of 1893, 1991 for the Swedish banking crisis, and 2008 for the American financial crisis of that year. t-2 is the date two years before the crisis hit; t + 5 is the date five years after. In all three cases, the economy suffered severe damage from the banking crisis: unemployment shot up and came down only slowly and erratically. In all three cases, five years after the crisis the unemployment rate remained high compared to pre-crisis levels. Unemployment rate 14% 12 10 8 6 4 2 t-2 t-1 t Sweden 1991 t+1 t+2 Panic of 1893 t + 3 United States 2008 t+4 t + 5 t+6 t +7 Time period (years)