The Great Depression

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The Great Recession and the Great Depression

The Great Recession and the Great Depression

The Great Depression and the Great Depression thus were both caused by policies deriving from nostalgia for the world of the Enlightenment. Drawing on theories from the eighteenth century, hard-headed policy makers either assumed or tried to recreate the idealized conditions of Hume and Smith. These policy makers ignored both the growth of economies of scale in modern economies and the work of behavioral economists who have shown that people do not behave as homo economicus. The results of their efforts in the 1920s and in recent decades was to produce the new economy of the earlier period and the goldilocks economy of the later one that turned into booms and busts. Was it inevitable that these economic expansions would end badly? Minsky said it was, that people become more complacent with prosperity and willing to take on risks they often know are highly suspect. 6 Reinhart and Rogoff more recently used historical evidence to agree that booms typically precede financial crises, just as pride goes before a fall. 7
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Race and life expectancy in the USA in the Great Depression

Race and life expectancy in the USA in the Great Depression

findings (Fishback et al., 2007; Tapia Granados and Diez Roux; 2009; present work) agree with this. Heart disease was a more important cause of death in the 1960s than either during the Great Depression or nowadays (Goldman and Cook, 1984; Tate et al., 2016 ). Thus, the decline in the relative importance of heart disease mortality may explain some of the divergence between older and more recent work on this cyclicality. This could be one of the reasons both the Great Depression era and recent times are procyclical, while mid-century evidence is more elusive. Other prominent causes of death that have been linked to the economy are air pollution (Schwartz and Dockery, 1992), accidents (Ruhm 2015; He 2016), and alcohol-related deaths (Brenner, 1975; Norström, 2007). Replicat- ing our projection-based analysis with a portfolio of cause-specific projections is not an alternative (Wilmoth, 1995).
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The Great Depression A Monetarist View

The Great Depression A Monetarist View

Earlier research, by Friedman-Schwartz (1963), suggests the Great Depression can be explained by a contracting money supply due to poorly regulated banks and inadequate monetary response. This paper investigates this theory through estimating the relationship between industrial production, the monetary base, the currency-to-deposit ratio, and the interest rate from 1921 to 1960. The empirical estimates show that both the monetary base and the currency-to-deposit ratio are important in explaining business cycles. These results, coupled with close examination of economic activity, interest rates, and the money supply, suggest that much of the economic distress from 1929 to 1933 could have been alleviated by the Federal Reserve expanding the monetary base earlier as well as incorporating more aggressive bank regulation.
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Correspondent Clearing and the Banking Panics of the Great Depression

Correspondent Clearing and the Banking Panics of the Great Depression

Between the founding of the Federal Reserve System in 1913 and the depression of the 1930s, three check-clearing systems operated in the United States. The Federal Reserve cleared checks for members of the system. Clearing houses cleared checks for members of their organizations. Correspondents cleared checks for all other institutions. The correspondent-clearing system was vulnerable to counter-party cascades, particularly because accounting conventions overstated reserves available to individual institutions and the system as a whole. In November 1930, a correspondent system in the center of the United States collapsed, causing the closure of more than one hundred institutions. Bank runs radiated from the locus of events, and additional correspondent networks succumbed to the situation. For the remainder of the contraction, banks that relied upon correspondents to clear checks failed at higher rates than other banks. In sum, weaknesses within a check-clearing system played a hitherto unrecognized role in the banking crises of the Great Depression.
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Life and death during the Great Depression

Life and death during the Great Depression

economic downturns on population health. The Great Depression of the 1930s was the most important economic downturn in the U.S. in the twentieth century. We used historical life expectancy and mortality data to examine associations of economic growth with population health for the period 1920 –1940. We conducted descriptive analyses of trends and examined associations between annual changes in health indicators and annual changes in eco- nomic activity using correlations and regression models. Popula- tion health did not decline and indeed generally improved during the 4 years of the Great Depression, 1930 –1933, with mortality decreasing for almost all ages, and life expectancy increasing by several years in males, females, whites, and nonwhites. For most age groups, mortality tended to peak during years of strong economic expansion (such as 1923, 1926, 1929, and 1936 –1937). In contrast, the recessions of 1921, 1930 –1933, and 1938 coincided with declines in mortality and gains in life expectancy. The only exception was suicide mortality which increased during the Great Depression, but accounted for less than 2% of deaths. Correlation and regression analyses confirmed a significant negative effect of economic expansions on health gains. The evolution of population health during the years 1920 –1940 confirms the counterintuitive hypothesis that, as in other historical periods and market econo- mies, population health tends to evolve better during recessions than in expansions.
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New Deal for Minorities During the Great Depression

New Deal for Minorities During the Great Depression

Abstract: During the Depression years, minority groups in the United States suffered more than the other segments of the American society. Yet, they were not the focus of New Dealers. One may wonder why and how were the lives of women, African Americans, and Indian Americans impoverished by the Great Depression enhanced under the New Deal. At the outset, NIRA codes emphasized women’s inferiority to men since they reinforced traditional long-range place in the labor arena. African Americans, too, suffered more because of the NIRA. Likewise, the AAA and the CCC were administrated in segregationist manners. It was until 1935 onwards that things changed in favor of those minorities. Federal relief programs and agencies like the FERA, the WPA, and the NYA; and many other acts and executive orders contributed significantly in enhancing minorities’ conditions of life during the Depression years.
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Geographical change in Tasmanian agriculture during the Great Depression

Geographical change in Tasmanian agriculture during the Great Depression

mid- 1 920s . Agricultural regions are defined for 1 926/27 using both the Weaver method and cluster analysis on derived estimates of net farm income at the municipality level . The body of the thesis examines �he impact of the Great Depression on four main branches of the Tasmania rural economy. Potatoes, dairying, sheep and fruit are examined separately with the discussion considering problems of locational change, factors behind increasing productivity, and changes in the processing and marketing of rural commodities . The interplay between policy and practice is constantly evaluated as farmers and the government tried to adapt to unprecedented stress in the traditional relationships between the producers and consumers of agricultural products .
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Keynes on the Marginal Efficiency of Capital and the Great Depression

Keynes on the Marginal Efficiency of Capital and the Great Depression

The question of the long-run prospects of profitability and its association with the stage of the economy looms large in the works of the major economists of the past. Keynes’s analysis of profitability (encapsulated in his notion of the marginal efficiency of capital) and its evolution, although sketchy, is nevertheless consistent with his fundamental principle about the causal priority of investment over saving and is in this sense innovative and characteristically different to both the classical and also the neoclassical analyses. Keynes uses his notion of the marginal efficiency of capital (henceforth MEC) not only as an explanation of the short term fluctuations in the level of economic activity, but as an interpretation of more serious long term fluctuations such as that of the great depression. In addition, Keynes proposes specific economic policies in an effort to prolong the expansionary stage of the economy and, at the same time, mitigate the adverse economic effects of depressions.
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Wages, productivity, and work intensity in the Great Depression

Wages, productivity, and work intensity in the Great Depression

The most significant and rapid response mechanism available to firms during the initial stages of the Great Depression was reductions in average working hours. However, two factors combined to prevent a fully offsetting internal response. First, short-term uncertainty over the severity of the downturn served initially to prevent radical departures from normal production activity. Second, and perhaps more important, workforce utility constraints resulted in lower weekly earnings reductions than desired by firms. The result was a positive gap between paid- for and actual hours of work. We attempt to examine the implications of this excess labor supply on wage determination. We find that decreases in work intensity served to dampen short-run wage growth across the manufacturing sector. Indeed, this source of wage impact was considerably more important than its external market equivalent, the rate of
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Why didn't economists predict the Great Depression?

Why didn't economists predict the Great Depression?

Economists failed to forecast the Great Depression, perhaps because they had lacked reason to theorize enough about business cycles. Since theory is a public good, the market produces too little of it. The prospect of ex post fame may induce theory; but fame comes from explaining famous events, not from averting adverse events. Also, learning-by-doing induces theory by cutting its cost, favoring the first theories to be developed. These dealt with markets – not business cycles – in the decades before the Depression. (Keywords: Great Depression, theory of business cycles, history of macroeconomic thought, marketplace of ideas, learning by doing. JEL classifications: B10, E32)
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Review of Ravi Batra, The Great Depression of 1990

Review of Ravi Batra, The Great Depression of 1990

The Great Depression of 1990 was on the New York Times best-seller list for non-fiction in the summer of 1987. It follows a standard formula for best sellers in forecasting: Forecast a great disaster, and include a formula for redemption. If the disaster occurs, you can say, "I told you so." If it doesn't occur, you say, "It is good that they listened to my advice. I saved them." How can you lose? When I first saw this book, it occurred to me that it was a hoax.

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The Great Depression Begins

The Great Depression Begins

WOMEN STRUGGLE TO SURVIVE Women worked hard to help their families survive adversity during the Great Depression. Many women canned food and sewed clothes. They also carefully managed household budgets. Jeane Westin, the author of Making Do: How Women Survived the ’30s, recalled, “Those days you did everything to save a penny. . . . My next door neighbor and I used to shop togeth- er. You could get two pounds of hamburger for a quarter, so we’d buy two pounds and split it—then one week she’d pay the extra penny and the next week I’d pay.” Many women also worked outside the home, though they usually received less money than men did. As the Depression wore on, however, working women became the targets of enormous resentment. Many people believed that women, especially married women, had no right to work when there were men who were unemployed.
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The Global Economic Crisis through the prism of the Great Depression

The Global Economic Crisis through the prism of the Great Depression

Lack of regulation, inadequate control of the financial system and creative financial engineering were not the only causes of the global economic disorder a few years ago. The economic policy deserves some criticism as well. During much of the last decade the US monetary policy was quite expansive. The Fed only cared about inflation trends. However, as in most of the pre-crisis period, the rate of inflation and the output gap were fairly stable, the monetary authorities ignored other important trends, first of all the following: fluctuations in asset prices, excessive growth of investment in the housing sector, consumption growth and a negative trend in the current account deficit. A continuous reduction in interest rates only fueled the mortgage bubble. The increase in key interest rates from mid 2004 to July 2006, which indicated a somewhat restrictive Fed monetary policy, is very reminiscent of the policy before the Great Depression. We should not forget that the Fed’s actions during the expansion of the 1920s and on the eve of the Great Depression were deemed irresponsible and inadequate, while monetarists found them to be the fundamental cause of the forthcoming collapse. The Fed allowed the rise of money supply by 61% over 8 years. An increase in interest rates on the eve of 1929 came late and did not reduce speculation but investment in the real economy instead (Friedman & Schwartz, 1971).
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The Great Depression in the eyes of Bulgaria's inter war economists

The Great Depression in the eyes of Bulgaria's inter war economists

The first global financial and economic crisis of the 21st century is still (mid-2009) leashing back and forth between the major economic zones, strongly distressing also countries like Bulgaria whose interdependence has steadily risen over the last years. More than 70 years after the end of the Great Depression, economists are still in search of explanations for the crises of capitalism. Despite the huge progress in the analytical methods of predic- tion and the vast computing power behind them, many economists have stunningly failed to foresee the upcoming trouble. The public opinion, just as in the 1930s, blames the profession for its inability to warn it about the dramatic downturn of the cycle.
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Causes of the Great Depression

Causes of the Great Depression

• "Concentrated+wealth+in+the+great+depression." Google Search. Google, n.d. Web. 15 Apr. 2017. • "The Great Depression." Ushistory.org. Independence Hall Association, n.d. Web. 16 Apr. 2017. • Kelly, Martin. "Top 5 Causes of the Great Depression." ThoughtCo. N.p., n.d. Web. 16 Apr. 2017. • "Silvapages." Effects of WWI. Silvapages, n.d. Web. 16 Apr. 2017.

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Accounting for the Great Depression

Accounting for the Great Depression

Several prominent theories blame the Great Depression on frictions in labor and capital mar- kets. The sticky-wage theory is that wage stick- iness together with a monetary contraction produces a downturn in output (see Michael Bordo et al., 2000). The cartelization theory is that an increase in cartelization and unioniza- tion leads to a slow recovery (see Harold Cole and Lee Ohanian, 2001). The investment- friction theory is that monetary contractions in- crease frictions in capital markets that produce investment-driven downturns in output (see Ben Bernanke and Mark Gertler, 1989; Charles Carlstrom and Timothy Fuerst, 1997). We think the critical feature of both the sticky-wage and cartelization theories is that their frictions lead to a wedge between the marginal rate of substi- tution between leisure and consumption and the marginal product of labor. The critical feature of the investment-friction theory is that capital- market frictions introduce a wedge between the intertemporal marginal rate of substitution in consumption and the marginal product of capital.
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The Great Depression ( ) was the

The Great Depression ( ) was the

support for a monetary source for the economic contraction. These results make a credible, narra- tive case supporting the monetary source of the contraction, and Hamilton points to a variety of financial measures that indicate a notable change in monetary policies prior to the Great Depression. The research provides a simple model for a monetary policy reaction function, describes a mechanism for transmitting monetary policy changes to the real economy, and then makes inferences about how the changes in monetary policies affected key macro- economic aggregate measures of real activity. The connection between monetary policy actions and the effects on the real economy does not arise from a precisely specified and estimated economic model. Recent theoretical and empirical approaches to macroeconomics suggest a less central role for mone- tary and nominal quantities and have implications for the debate over the Great Depression that are similar to Temin’s. Research continues to uncover more pre- cise evidence of policy ineptness—in fiscal policy (particularly, regulatory restrictions) as well as mon- etary policy—and whether real economic phenomena are sufficient for explaining the severity of the real output contraction. 9 An example of this more recent
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Did the Great Depression affect Educational Attainment in the US?

Did the Great Depression affect Educational Attainment in the US?

individuals eligible to go to school to work instead. Second is that high unemployment would make going to school the best other viable alternative. Following these theoretical notions, this paper explores the impact of the Great Depression on education, on race (whites and blacks) and gender (males and females), during the period 1930-1940. Furthermore, I test the effects of state employment indices on education. The results (using 1960 census data) show some evidence that education of whites born between 1911 and 1915 was affected. However, there is no evidence that the variation in state employment indices affected the decision of schooling on the average (mean).
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The Great Depression and the Great Recession: A Comparative Analysis of their Analogies

The Great Depression and the Great Recession: A Comparative Analysis of their Analogies

Abstract: The decades preceding the Great Depression and the U.S. subprime mortgage crisis have close similarities. Both decades were characterized by rapid growth without major contractions, by an increase in liquidity, a lack of inflation, and a generalized decrease in risk premiums. Additional similarities included significant changes in the financing of real estate by commercial banks along with a consolidation of the banking sector and high hopes that the efficiency of monetary policy would prevent financial crises. These decades were also characterized by the consolidation of the powers of young central banks (the Federal Reserve System in the 1920s and the European Central Bank in the 2000s), by unsuccessful attempts to control market speculation, by their international dimensions, and by the eruption of crises after the failure of a major American financial institution that could have been avoided. Understanding these analogies help us better identify the causes of the subprime mortgage crisis and prevent history from repeating itself to the extent of such large-scale devastating consequences.
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The ins and outs of Greek unemployment in the Great Depression

The ins and outs of Greek unemployment in the Great Depression

However, due to the high unemployment persistence a currently unemployed individual has a probability of 78 % of being unemployed one year ahead and the low transition rates that charact[r]

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