From Great Depression to Great Credit Crisis: Similarities, Differences and Lessons

Economic Policy 62

Volumn , Issue , 2012, Pages 219-265

  Almunia, Miguel ^a   Bénétrix, Agustín ^b   Eichengreen, Barry ^a   O'Rourke, Kevin H ^b   Rua, Gisela ^a   Tenreyro, Silvana ^c   Perri, Fabrizio ^d,e,f,g  

^a UNIVERSITY OF CALIFORNIA   (United States)

^b TRINITY COLLEGE DUBLIN   (Ireland)

^c LONDON SCHOOL OF ECONOMICS   (United Kingdom)

^d UNIVERSITY OF MINNESOTA   (United States)

^e FEDERAL RESERVE BANK OF MINNEAPOLIS   (United States)

^f NATIONAL BUREAU OF ECONOMIC RESEARCH   (United States)

^g CEPR ^*  (United States)

Author keywords

Current crisis and the exchange rate regime, shaping policy responses; Decline in manufacture in the peak of 2008, as akin in 1929; Employing vector autoregressions, instrumental variables, and qualitative evidence; Fiscal multipliers in episodes of financial crisis, light on debate; From the Great Depression to the Great Credit Crisis, parallels differences; Global stock markets, falling even faster than the Great Depression; Monetary policy in a near zero interest rate liquidity trap 2009, unlike 1930s; Monetary fiscal responses of the 1930s, light on current policies; Real estate boom, declining lending securitization, global imbalances adding fire; The Great Credit Crisis, 'surpassed' the Great Depression destroying World trade

Indexed keywords

EID: 84886331866     PISSN: None     EISSN: None     Source Type: Book    
DOI: 10.1002/9781444390261.ch1     Document Type: Chapter

References (85)

1. Abelshauser, W. (1998). 'Germany: Guns, butter, and economic miracles,' in M. Harrison (ed.), The Economics of World War II: Six Great Powers in International Comparison, Cambridge University Press, Cambridge, 122-76.
2. Allen, G.C. (1981). A Short Economic History of Modern Japan. Macmillan, London.
3. Arellano, M. (2003). Panel Data Econometrics, Oxford University Press, Oxford.
4. Amiti, M. and D.E. Weinstein (2009). 'Exports and financial shocks', mimeo.
5. Auboin, M. (2009a). 'The challenges of trade financing', available at: http://voxeu.org/index.php?q=node/2905
6. Auboin, M. (2009b). 'Trade finance: G20 and follow-up', available at: http://www.voxeu.org/index.php?q=node/3635
7. Bairoch, P. (1982). 'International industrialization levels from 1750 to 1980', Journal of European Economic History, 11, 269-331.
8. Barro, R.J. and C.J. Redlick (2009). 'Macroeconomic effects from government purchases and taxes', NBER Working Paper No. 15369.
9. Beetsma, R., M. Giuliodori and F. Klaassen (2006). 'Trade spill-overs of fiscal policy in the European Union: A panel analysis', Economic Policy, 21(48), 639-87.
10. Beetsma, R. (2008). 'The effects of public spending shocks on trade balances and budget deficits in European Union', Journal of the European Economic Association, 6, 414-23.
11. Beetsma, R. (2009). 'Temporal aggregation and SVAR identification, with an application to fiscal policy', Economic Letters, 105, 253-55.
12. Bernanke, B.S. (2000). Essays on the Great Depression. Princeton University Press, Princeton.
13. Bernanke, B.S. and H. James (1991). 'The Gold Standard, deflation and financial crisis in the Great Depression: An international comparison', in R.G. Hubbard (ed.), Financial Markets and Financial Crises, University of Chicago Press, Chicago, 33-68.
14. Bernanke, B.S. and I. Mihov (2000). 'Deflation and monetary contraction in the Great Depression: An analysis by simple ratios', in Bernanke (2000).
15. Blanchard, O. and R. Perotti (2002). 'An empirical characterization of the dynamic effects of changes in government spending and taxes on output', Quarterly Journal of Economics, 117, 1329-68.
16. Bordo, M., B. Eichengreen, D. Klingebiel and M. Martinez-Peria (2001). 'Is the crisis problem growing more severe?', Economic Policy, 16(32), 51-82.
17. Brown, E. (1956). 'Fiscal policy in the thirties: A reappraisal', American Economic Review, 46(5), 857-79.
18. Burnside, C., M. Eichenbaum and J.D.M. Fisher (2004). 'Fiscal shocks and their consequences', Journal of Economic Theory, 115, 89-117.
19. Buyst, E. and P. Franaszek (2010). 'Sectoral developments, 1914-1945', in S. Broadberry and K.H. O'Rourke (eds.), Cambridge Economic History of Modern Europe, Vol. 2, Cambridge University Press, Cambridge, forthcoming.
20. Canova, F. and G. De Nicoló (2002). 'Monetary disturbances matter for business fluctuations in the G-7', Journal of Monetary Economics, 49, 1131-59.
21. Canova, F. and E. Pappa (2007). 'Price differentials in monetary unions: The role of fiscal shocks', Economic Journal, 117, 713-37.
22. Christiano, L., M. Eichenbaum and C.L. Evans (2005). 'Nominal rigidities and the dynamic effects of a shock to monetary policy', Journal of Political Economy, 113, 1-45.
23. Christiano, L., M. Eichenbaum and S. Rebelo (2009). 'When is the government multiplier large?' Northwestern University, October.
24. Christiano, L. and S. Harrison (1999). 'Chaos, sunspots and automatic stabilizers', Journal of Monetary Economics, 44(1), 3-31.
25. Cogan, J., T. Cwik, J. Taylor and V. Wieland (2009). 'New Keynesian versus old Keynesian government spending multipliers', Stanford University, February.
26. Eggertsson, G. (2008). 'Great expectations and the end of the depression', American Economic Review, 98, 1476-1516.
27. Eichengreen, B. (1992). Golden Fetters: The Gold Standard and the Great Depression 1919-1939, Oxford University Press, Oxford.
28. Eichengreen, B. and D. Irwin (2009). 'The slide to protectionism in the Great Depression: Who succumbed and why?' NBER Working Paper No.15142.
29. Eichengreen, B. and J. Sachs (1985). 'Exchange rates and recovery in the 1930s', Journal of Economic History, 44, 925-46.
30. Fatás, A. and I. Mihov (2003). 'On constraining fiscal policy discretion in EMU', Oxford Review of Economic Policy, 19, 112-31.
31. Federico, G. (1998). 'Italy's late and unprofitable forays into empire', in P. O'Brien and L.P. de la Escosura (eds.), The Costs and Benefits of European Imperialism from the Conquest of Ceuta, 1415, to the Treaty of Lusaka, 1974, Special Issue of Revista de Historia Economica, 16, 377-402.
32. Feinstein, C.H., P. Temin and G. Toniolo (1997). The European Economy between the Wars, Oxford University Press, Oxford.
33. Findlay, R. and K.H. O'Rourke (2007). Power and Plenty: Trade, War, and the World Economy in the Second Millennium, Princeton University Press, Princeton.
34. Fox, J. (2009). 'On the job front this is no Great Depression', The Curious Capitalist (16 March), available at: http://curiouscapitalist.blogs.time.com/2009/03/16/on-the-jobfront-this-is-no-great-depression-not-even-close/.
35. Francois, J. and J. Woerz (2009). 'The big drop: Trade and the Great Recession', available at: http://www.voxeu.com/index.php?q=node/3527
36. Freund, C. (2009). 'Demystifying the collapse in trade', available at: http://www.voxeu.org/index.php?q=node/3731
37. Galí, J., J.D. López-Salido and J. Vallés (2007). 'Understanding the effects of government spending on consumption', Journal of the European Economic Association, 5, 227-70.
38. Gordon, R.J. (2008). 'Did economics cause World War II?' NBER Working Paper No. 14560.
39. Gordon, R.J. and R. Krenn (2009). 'The end of the Great Depression: VAR insight on the roles of monetary and fiscal policy', mimeo, Northwestern University.
40. Hall, R.A. (2009). 'By how much does GDP rise if the government buys more output?', mimeo, Stanford University.
41. Helbling, T. (2009). 'How similar is the current crisis to the Great Depression?', available at: http://www.voxeu.org/index.php?q=node/3514
42. International Monetary Fund (2009a). World Economic Outlook, IMF, Washington, DC (April).
43. International Monetary Fund (2009b). 'The state of public finances cross-country fiscal monitor: November 2009', IMF Staff Position Note SPN/09/25, IMF, Washington, DC (November).
44. Kehoe, T. and E. Prescott (eds.) (2007). Great Depressions of the Twentieth Century, Federal Reserve Bank of Minneapolis.
45. King, G., O. Rosen, M. Tanner and A.F. Wagner (2008). 'Ordinary economic voting behavior in the extraordinary election of Adolf Hitler', Journal of Economic History, 68, 951-96.
46. Krugman, P. (2009). 'The Great Recession versus the Great Depression', Conscience of a Liberal (20 March), available at: http://krugman.blogs.nytimes.com/2009/03/20/the-great-recession-versus-the-great-depression/
47. League of Nations (1934). Public Finances, League of Nations, Geneva.
48. League of Nations (1939). World Production and Prices 1938/39, League of Nations, Geneva.
49. League of Nations (1945). Industrialization and Foreign Trade, League of Nations, Geneva.
50. Maddison, A. (2009). Statistics on World Population, GDP and Per Capita GDP, 1-2006 AD (March update), available at: http://www.ggdc.net/maddison/
51. Mitchel, B.R. (2003). International Historical Statistics, 1750-2000. Palgrave Macmillan, New York.
52. Monacelli, T. and R. Perotti (2006). 'Fiscal policy, the trade balance and the real exchange rate: Implications for international risk sharing', mimeo, Universitä Bocconi.
53. Mountford, A. and H. Uhlig (2009). 'What are the effects of fiscal policy shocks?' Journal of Applied Econometrics, 24, 960-92.
54. Nakamura, T. (1988). 'Depression, recovery, and war, 1920-1945', in P. Duus (ed.), The Cambridge Economic History of Europe, Vol. 6, The Twentieth Century, Cambridge University Press, Cambridge, 451-93.
55. Nickell, S.J. (1981). 'Biases in dynamic models with fixed effects', Econometrica, 49, 1417-26.
56. OECD (2009a). OECD in Figures 2008, OECD, Paris.
57. OECD (2009b). 'Fiscal packages across OECD countries: Overview and country details', OECD Economic Department, March.
58. Perotti, R. (2005). 'Estimating the effects of fiscal policy in OECD countries.' CEPR Discussion Paper No. 4842.
59. Perotti, R. (2007). 'In search of the transmission mechanism of fiscal policy.' NBER Working Paper No. 13143.
60. Rankin, K. (1992). 'New Zealand's gross national product: 1859-1939', Review of Income and Wealth, 38(1), 49-69.
61. Ramey, V.A. (2009). 'Identifying government spending shocks: It's all in the timing', mimeo, University of California, San Diego.
62. Ramey, V.A. and M.D. Shapiro (1998). 'Costly capital reallocation and the effects of government spending', Carnegie-Rochester Conference Series on Public Policy, 48, 145-94.
63. Ravn, M., S. Schmitt-Grohe and M. Uribe (2007). 'Explaining the effects of government spending shocks on consumption and real exchange rate', NBER Working Paper No. 13328.
64. Ritschl, A. (2005). 'The Nazi recovery, 1933-1936: Does the Keynesian interpretation still hold?' mimeo.
65. Romer, C. (1990). 'The Great Crash and the onset of the Great Depression', Quarterly Journal of Economics, 105, 597-624.
66. Romer, C. (1992). 'What ended the Great Depression?' Journal of Economic History, 52, 757-84.
67. Romer, C. and J. Bernstein (2009). The Job Impact of the American Recovery and Reinvestment Plan, Council of Economic Advisors and Office of the President, Washington, DC.
68. Romer, C. and D. Romer (forthcoming). 'The macroeconomic effects of tax changes: Estimates based on a new measure of fiscal shocks', American Economic Review.
69. Schön, L. (2007). En modern svensk ekonomisk historia. Tillväxt och omvandling under tva sekel, 2nd edn. SNS forlag, Stockholm.
70. Short, D. (2009). 'Four bad bears', DShort: Financial Lifecycle Planning (20 March), available at: http://dshort.com/
71. Spilimbergo, A., S. Symansky and M. Schindler (2009). 'Fiscal multipliers', IMF Staff Position Note.
72. Tanaka, K. (2009). 'Trade collapse and vertical foreign direct investment', available at: http://www.voxeu.org/index.php?q=node/3537
73. Temin, P. (1989). Lessons from the Great Depression, MIT Press, Cambridge MA.
74. Temin, P. and B. Wigmore (1990). 'The end of one big deflation', Explorations in Economic History, 27, 487-502.
75. Toniolo, G. (1980). L'economia dell'Italia fascista, Laterza, Bari.
76. Tooze, A. (2006). The Wages of Destruction: The Making and Breaking of the Nazi Economy, Allen Lane, London.
77. Uhlig, H. (2005). 'What are the effects of monetary policy on output? Results from an agnostic identification procedure', Journal of Monetary Economics, 52, 381-419.
78. United Nations (1962). International Trade Statistics 1900-1960. Mimeo, MGT(62)12 (May), available at http://unstats.un.org/unsd/trade/imts/historical_data.htm
79. Wagenführ, R. (1933). 'Die Industriewirtschaft: Entwicklungstendenzen der deutschen und internationalen Industrieproduktion 1860 bis 1932', Vierteljahrshefte zur Konjunkturforschung: Sonderheft 31.
80. Wandschneider, K. (2008). 'The stability of the interwar Gold Standard: Did politics matter?' Journal of Economic History, 68, 151-81.
81. White, E.N. (2009). 'Lessons from the Great American real estate boom and bust of the 1920s', NBER Working Paper No. 15573.
82. Wolf, H. and T. Yousef (2007). 'Breaking the fetters: Why did countries exit the interwar Gold Standard?' in T.J. Hatton, K.H. O'Rourke and A.M. Taylor (eds.), The New Comparative History: Essays in Honor of Jeffrey G. Williamson, MIT Press, Cambridge, MA, 241-65.
83. Wolf, N. (2008). 'Scylla and Charybdis: Poland's adherence to gold and the European economy, January 1928-December 1936', Explorations in Economic History, 45, 383-401.
84. Yi, K.-M. (2009). 'The collapse of global trade: The role of vertical specialization', in R.E. Baldwin and S. Evenett (eds.), The Collapse of Global Trade, Murky Protectionism, and the Crisis: Recommendations for the G20. Available from VoxEU: http://www.voxeu.org/reports/Murky_Protectionism.pdf
85. Zamagni, V. (1993). The Economic History of Italy 1860-1990, Clarendon Press, Oxford.