A Retrospective Look at Rescuing and Restructuring General Motors and Chrysler

• Published in: The Journal of economic perspectives Vol. 29; no. 2; pp. 3 - 23
• Main Authors: Goolsbee, Austan D., Krueger, Alan B.
• Format: Journal Article
• Language: English
• Published: Nashville American Economic Association 01-04-2015
• Subjects: Automobile industry; Automobile manufacturers; Automobile sales; Automobiles; Automotive industries; Bailouts; Bankruptcy; Bankruptcy reorganization; Business economics; Decision making; Economic conditions; Economic crisis; Economic models; Economic performance; Economic policy; Economic recessions; Economic recovery; Economic statistics; Economic theory; Financial crisis; Great Recession; Market share; Market shares; Motors; Policy making; Recession; Studies; Symposia: The Bailouts of 2007–2009; U.S.A; United States > US
• ISSN: 0895-3309; 1944-7965
• DOI: 10.1257/jep.29.2.3

The rescue of the US automobile industry amid the 2008-2009 recession and financial crisis was a consequential, controversial, and difficult decision made at a fraught moment for the US economy. Both of us were involved in the decision process at the time, but since have moved back to academia. More than five years have passed since the bailout began, and it is timely to look back at this unusual episode of economic policymaking to consider what we got right, what we got wrong, and why. In this article, we describe the events that brought two of the largest industrial companies in the world to seek a bailout from the US government, the analysis that was used to evaluate the decision (including what the alternatives were and whether a rescue would even work), the steps that were taken to rescue and restructure General Motors and Chrysler, and the performance of the US auto industry since the bailout. We close with general lessons to be learned from the episode.