##ft, fabian lange, and matthew j. notowidigdo ( 2013 ), “ duration dependence and labor market conditions : evidence from a field experiment, ” quarterly journal of economics, vol. 128 ( 3 ), pp. 1123 – 67 ; and rand ghayad ( 2014 ), “ the jobless trap ( pdf ), ” unpublished paper, northeastern university, department of economics. see, among others, louis s. jacobson, robert j. lalonde, and daniel g. sullivan ( 1993 ), “ earnings losses of displaced workers, ” american economic review, vol. 83 ( september ), pp. 685 – 709 ; steven j. davis and till von wachter ( 2011 ), “ recessions and the costs of job loss ( pdf ), ” brookings papers on economic activity, fall, pp. 1 – 55 ; till von wachter, jae song, and joyce manchester ( 2009 ), “ long - term earnings bis central bankers ’ speeches brownlee was an apprentice plumber and skilled construction worker when the recession hit, and he saw his wages drop sharply as he scrambled for odd jobs and temporary work. he is doing better now, but still working for a lower wage than he earned before the recession. vicki lira lost her full - time job of 20 years when the printing plant she worked in shut down in 2006. then she lost a job processing mortgage applications when the housing market crashed. vicki faced some very difficult years. at times she was homeless. today she enjoys her part - time job serving food samples to customers at a grocery store but wishes she could get more hours. vicki lira is one of many americans who lost a full - time job in the recession and seem stuck working part time. the unemployment rate is down, but not included in that rate are more than seven million people who are working part time but want a full - time job. as a share of the workforce, that number is very high historically. i have described the experiences of dorine, jermaine, and vicki because they tell us important things that the unemployment rate alone cannot. first, they are a reminder that there are real people behind the statistics, struggling to get by and eager for the opportunity to build better lives. second, their experiences show some of the uniquely challenging and lasting effects of the great recession. recognizing and trying to understand these effects helps provide a clearer picture of the progress we have made in the recovery,

supervision authorities to identify and quantify risks of potential financial instability in advance. on this, we find stress testing to be a powerful tool to assess financial stability ex - ante. unfortunately, financial institutions and regulators in emerging markets have significantly lagged behind their counterparts in advanced economies, especially on credit and liquidity risk stress testing. therefore, regulators in emerging markets should move faster to increase the use of macro stress testing. they should also push financial institutions to invest in human resource and technology to conduct macro stress testing at least on an annual basis. and regulators and monetary policymakers must increase coordination in order to arrive at more relevant and convincing macro stress testing scenarios. the third challenge is the role of prudential measures. while it is unclear how effective domestic monetary policy can be in checking excessive asset price volatility, the threat of financial instability has given rise to a more prominent role for macro - prudential measures to reduce the procyclicality of the credit market. as we see it, the primary challenge in this respect is how best to move forward. combining the use of prudential measures with monetary policy is a useful policy option, but it is still an unsettling issue because of the concern for efficiency. in practice, discretionary prudential measures pose difficulty in the form of potential regulatory forbearance, market distortion, timing effectiveness, and the difficulty in modeling early warning system. rule - based prudential measures, on the other hand, pose difficulty in policy calibration. this is to say calibrating this type of policy tools has so far proven difficult for emerging market where data availability is limited and large structural breaks are usually present. turning to longer - term perspective, the attainment of monetary and financial stability is determined predominantly by embedded structural features of the economy. this points to the importance of pursuing long run structural reforms. on this issue, we discuss the role that financial sector development and policy institutions and framework can play in this respect. first, financial development the first point we make on financial development is the importance of a well - balanced financial structure. efficient and well balanced financial system will allow the system to better manage and absorb shocks as the market would be less prone to one - way market conditions and possesses greater liquidity. a well balanced financial structure contributes positively to information processing, price discovery, and risk management. the experience of the asian crisis, for example, points to the critical importance of the development of long - term local currency