This figure tracks unemployment in the wake of two banking crises: the Panic of 1893 in the United States and the Swedish banking crisis of 1991. t represents the year of the crisis—1893 for the United States, 1991 for Sweden. t − 2 is the date two years before the crisis hit; t + 5 is the date five years after. In both cases, the economy suffered severe damage from the banking crisis: unemployment shot up and came down only slowly and erratically. In both cases, five years after the crisis the unemployment rate remained high compared to pre-crisis levels.
Sources: Christina D. Romer, “Spurious Volatility in Historical Unemployment Data,” Journal of Political Economy 94, no. 1 (1986): 1–37; Eurostat.
Sources: Christina D. Romer, “Spurious Volatility in Historical Unemployment Data,” Journal of Political Economy 94, no. 1 (1986): 1–37; Eurostat.