A goal of extending the duration of unemployment insurance (UI) in recessions is to reduce the rate of benefit exhaustion and hence increase coverage. However, such extensions potentially come at the cost of increased nonemployment durations. If UI benefit durations vary with the business cycle, it is very difficult to estimate the effects of this policy because of reverse causality. In this paper, we exploit the fact that the duration of UI benefits in Germany is a function of exact age that is invariant over the cycle. Using the universe of unemployment spells and career histories we implement a regression discontinuity design separately for twenty years and across industries and correlate our estimates with measures of the business cycle. The nonemployment effects of UI extensions we find are at best somewhat declining in large recessions. Yet, the UI exhaustion rate, and therefore the additional coverage provided by UI extensions, rises substantially during a downturn. To help interpret these findings, we derive a new welfare formula in a model of job search with liquidity constraints that links the net social benefits from UI extensions to the exhaustion rate and the disincentive effect of UI.