new cohorts on the labour market. however, they could be mitigated by active labour market policies, such as an appropriate training policy, which have a very effective and targeted impact on human capital depreciation. 1. 2. second, in europe, the ecb has significantly loosened monetary policy in recent years even after the limits of conventional monetary policy have been reached. but this has been no ordinary recession. it has also been associated with an acute financial crisis and history has shown that recessions associated with financial crises can have an even longer lasting impact on economic performance. during financial crises, credit constraints can tighten drastically for banks and for firms and households which in turn harms physical capital and labour productivity growth. financing constraints may lead to increased firm defaults. this may not be detrimental to long - term growth if it has a “ cleansing effect ”, if non performing firms and equipment disappear and free resources for innovative young firms 3. however, it may also hit young, innovative and risky firms, which are more fragile and financially dependent 4. according to foster, grim and haltiwanger 5, reallocation in the united states during the great recession r. jackman and r. layard, 1991. “ does long - term unemployment reduce a person ’ s chance of a job? a time - series test, ” economica, london school of economics and political science, vol. 58 ( 229 ), pages 93 – 106, february. a. maravalle, m. - e. de la serve. and g. verdugo, 2014. “ the euro area beveridge curve in the post - crisis period : increase in structural unemployment since 2010, ” quarterly selection of articles – bulletin de la banque de france, banque de france, issue 36, pages 95 – 109, winter. r. j. caballero and m. l. hammour, 1996. “ on the timing and efficiency of creative destruction, ” the quarterly journal of economics, oxford university press, vol. 111 ( 3 ), pages 805 – 852. m. ouyang, 2009. “ the scarring effect of recessions, ” journal of monetary economics, elsevier, vol. 56 ( 2 ), pages 184 – 199, march. l. foster, c. grim and j. haltiwanger, 2016. “ reallocation in the great recession : cleansing or not?, ” journal of labor economics, university

on potential growth in particular in the aftermath of a financial crisis ; and • monetary policy can foster long - term growth by supporting structural reforms and in particular the ones favoring a more resilient and efficient financial system. 1. monetary policy can contribute to alleviate the medium term negative effects of a deep recession on potential growth 1. 1. first, “ border line ” between appropriate counter - cyclical monetary policy and medium - term sustainable growth is an open one. a deep recession, such as the great recession, can have long lasting effects on potential growth, which are different in nature from the usual consequences of a cyclical downturn. because of its duration and amplitude, it may damage the available human and physical bis central bankers ’ speeches capital stock as well as medium - term productivity growth. monetary policy may alleviate these effects through an appropriate accommodative stance. first, a deep recession may lead to a depreciation of the available human capital stock 1. long term unemployment reached historical heights during the great recession in the united states, spain, italy or france, as you can see on this graph. the skills of long - term unemployed ’ may then be eroded by lack of practice. long - term unemployment may also discourage part of the labour force, which may leave definitively the labour market. the structural decline in the labour force participation rate accelerated with the crisis in the united states. this evolution is however not shared by all countries, such as spain. indeed, the reverse behaviour may be observed as the unemployment of one member of a household may lead other members of the household to enter the labour market. the two effects can offset or dominate one another, leading to different country paths, as shown on the graph. finally, a deep recession may lead to sectoral reallocation, with part of the labour force lacking appropriate skills. as can be seen in this graph, the spanish construction workers had to face a sharp contraction of the share of employment in that sector, from 13 % of total employment to 5 % and find a job in other sectors. the decline is less significant but still relevant in countries which experienced a construction boom. more generally, according to a banque de france research paper 2, the beveridge curve has shifted in the euro area and the united states, with more vacancies associated with a similar level of unemployment, pointing at an increase in structural unemployment. these effects of the crisis on human capital would fade away only slowly, with the arrival of