POLICIES IN THE UNITED STATES TO PROVIDE HOUSING ASSISTANCE TO LOW‐INCOME HOUSEHOLDS1

From the 1930s onwards America's housing assistance policies have largely been shaped by the federal government's response to catastrophe, whether of an external nature (the Great Depression, the urban riots of the 1960s) or an internal nature (mismanagement, excessive costs). Consequently, today's collection of federal housing policies resemble more the results of an archaeological dig through 70 years of activity than a coherent approach to a longstanding problem. Nonetheless, one key theme that emerges is the shift from wholly government solutions to a hybrid public–private partnership approach in the early 1970s.     

The impact of monetary policy in the midst of big shocks

This paper studies the impact of Federal Reserve policies that created the largest deviations from price stability during the Fed׳s first 100 years: the post-World War I deflation, the deflation of the Great Depression, the inflation of World War II, and the Great Inflation of the 1970s. In terms of their macroeconomic impacts, I find that deflation was uniquely depressing in the 1930s because of cartel policies that prevented nominal prices and wages from adjusting to clear markets, and not because deflation is generically depressing. I find that the biggest impact of monetary policy during World War II was in debasing debt through inflation. I find that the main drivers of the 1970s economy were long-run changes in productivity and the labor market, and that there may have been little that the Fed could have done at this time to expand employment and output. More broadly, I find that macroeconomic performance would have been better over the Fed׳s first century had the Fed followed a monetary policy to deliver stable prices.     

REAL BUSINESS CYCLE MODELS OF THE GREAT DEPRESSION: A CRITICAL SURVEY

Abstract.  Recent years have witnessed a revival of interest in the Great Depression of the 1930s. Among the differing new interpretations, the real business cycle (RBC) approach is particularly significant. It represents an outstanding methodological innovation in trying to cast the Great Depression within an 'equilibrium' framework. This paper critically reviews the RBC interpretation of the Great Depression, clarifying its theoretical and methodological foundations, and paving the way for future assessments of its validity.     

A Silver Lifeboat,not Silver Fetters: Why and how the Silver Standard Insulated China from the 1929 Great Depression

We use counterfactual simulations based on an estimated dynamic stochastic general equilibrium model to demonstrate why China was affected less than other major countries during the first two years of the Great Depression. We show that being on a silver standard insulated China from the adverse consequences of the Great Depression by saving the country both from a tightening of monetary conditions and from a detrimental internal deflation. Without the insulation of the silver standard, China might have suffered from a cumulative output loss of between 11% and 23%, and its inflation might have become deflation. Copyright © 2015 John Wiley & Sons, Ltd.     

Wilhelm Röpke and Richard C. Koo On Secondary Deflations and Balance Sheet Recessions

The concept of a ‘secondary deflation’ was developed in the 1930s by the German economist Wilhelm Röpke, who saw it as something different from a normal depression. While a primary deflation is a necessary reaction to the inflation from a boom period, a secondary deflation is independent and economically purposeless. Röpke argued that secondary depressions occurred in the US, Germany, France and Switzerland during the 1930s, but was vague on what made them follow primary depressions. Recently, the Taiwanese–American economist Richard C. Koo has claimed to have discovered the ‘Holy Grail of macroeconomics’, that is, what made the Great Depression so deep and long. During the Great Depression, the bursting of the asset price bubble resulted in private sectors having more debt than assets; as they shifted from maximising profits to minimising debt, the consequent debt deflation shrank the economy. According to Koo, Western economies today are suffering from a similar ‘balance sheet recession’. Strengthened by the notion of a balance sheet recession, Röpke's long‐lost insights might advance our understanding of the business cycle in general and the present crisis in the US and the Eurozone in particular.     

Fiscal and monetary interdependence

Where classical economics integrates the quantity theory of money with the concept of Ricardian equivalence, the tendency of recent macroeconomic presentations is to focus either upon money and inflation or upon taxation and debt. That neglect of classical monetary–fiscal integration is surprising, given an initiative by the International Monetary Fund that set credit, money, and fiscal policy within a single structure. This article places those ‘credit counterparts of broad money’ in the context of the Great Depression and the recent global financial crisis. The upshot is a set of conclusions: that, to counter the prospect of deflation, quantitative easing is a weak policy response; that fiscal deficits are better; and that cuts in taxation are preferable to increased government spending.     

The Great Depression versus the Great Recession in the U.S.: How fiscal,monetary, and financial polices compare

This study reviews the financial distress that triggered and amplified the financial crises of the Great Depression and Great Recession and compares macroeconomic and financial policy responses. Shadow banking funded the build-up of the financial excesses that preceded both. The quicker and forceful response of monetary and fiscal policy during the Great Recession and stronger action to restore market functionality mitigated the downturn and aided recovery. Nevertheless, actions to address the mortgage debt overhang were slower. Post-Depression reforms focused on preventing deposit runs and post-Great Recession reforms on preventing runs on bank debt and shadow banks while boosting capital buffers.     

Great recession,slow recovery and muted fiscal policies in the US

This paper reconsiders the role of macroeconomic shocks and policies in determining the Great Recession and the subsequent recovery in the US. The Great Recession was mainly caused by a large demand shock and by the ZLB on the interest rate policy. In contrast with previous findings, the subsequent jobless recovery is explained by the ZLB effect. We estimate a fraction of Non-Ricardian households which is close to 50%, and obtain comparatively large fiscal multipliers. However we cannot detect a significant contribution of fiscal policies in stabilizing the US economy. For instance, the 2007–2009 large increase in expenditure-to-GDP ratios was apparently determined by the adverse non-policy shocks that caused the recession.     

The London Monetary and Economic Conference of 1933: A Public Goods Analysis

A bstract . Hegemony theorists attribute the duration and severity of the Great Depression to the fact that, in 1933, the United States refused to take the place of Great Britain as world economic leader. This argument is based on the proposition that a major power must coordinate the international monetary and trading systems if is to obtain in those sectors. This thesis is reappraised by applying the theories of public goods , clubs, and public choice to the London Monetary and Economic Conference of 1933, an occasion when the United States declined the role of world economic hegemon.
Dig deep tunnels, store grain everywhere, and never seek begemony.     

global unemployment

What are the lessons of American unemployment in the Great Depression? Richard Vedder and Lowell Gallaway, of Ohio University, argue that the cause of American pre-war unemployment was government inspired increases in real wages.     

What Would Milton Friedman Have Thought of the Great Recession?

Milton Friedman died in 2006 , right before the onset of the Great Recession. Unfortunately, we will never know how Friedman would have interpreted this event. However, we can draw some inferences from his published views on the Great Depression, as well as his views on more recent monetary policy, especially in Japan. It seems likely that Friedman would have blamed the Fed for insufficiently expansionary monetary policy during 2008 and 2009, a view that is quite different from the conventional conservative interpretation of events.     

Bad news in the Great Depression,the Great Recession,and other U.S. recessions: A comparative study

In economic recessions consumption usually drops in tandem with other aggregate quantities as output or employment. Following the permanent income hypothesis, these drops can be rationalized by the idea that consumers have pessimistic views about their long-run income. Using a standard signal-extraction model, we show that this pessimism can be due either to a persistent fall of aggregate productivity before and during the recession (signaling a future decline of income), or to other negative information unrelated to contemporaneous fundamentals, which we label “bad news”. We classify U.S. recessions (from 1919 to 2015) according to a (bad) news index reflecting this negative information. We find that both the Great Depression and the Great Recession score highest in this index. The index is such that we can rule out that this is due merely to the length or the depth of these recessions. Instead, these two recessions are similar in that both were aggravated by a wave of pessimism about future income which cannot be related to contemporaneous fundamentals.     

Money and velocity during financial crises: From the great depression to the great recession

This study models the demand for a broad monetary aggregate (M2) from the Great Depression through the Great Recession. Key to the model is the interaction between a measure of time-variation in economic agents’ perceived financial risk and an index of the cost of portfolio adjustment. The finding of a useful money demand relationship suggests that skepticism regarding the indicator role of a broad, liquid money aggregate as a policy guide may be exaggerated. Further, our model provides some guidance for policymakers who face the challenge of unwinding large balance sheets as risk premia return to normal and velocity adjusts.     

Quantifying Structural Change in U.S. Agriculture: The Case of Research and Productivity

Previous work on structural change in agriculture has failed to distinguish long-run trends from structural breaks leading to new trends. We measure structural changes as statistically significant breaks in either stochastic or deterministic time trends, and apply these measures to agricultural productivity and research. Productivity has a break in 1925 accompanying agriculture's early experience with the Great Depression. Research trends shifted in 1930 as the Depression and new technology began to strongly influence efficient farm size and capitalization. After modeling lags between research and productivity impacts in a vector autoregression (VAR), we compare our results to earlier work by developing a procedure to estimate the rate of return to research from the impulse response function of the VAR.     

The share market boom and the recent disinflation in the OECD countries: the tax-effects,the inflation-illusion and the risk-aversion hypotheses reconsidered

This paper tests the tax-effect, the inflation-illusion and the risk-aversion hypotheses using pooled cross-section and time series data for the OECD countries for the postwar and the Great Depression periods. The estimates suggest that share markets suffer from inflation illusion and fail to incorporate into share prices the tax penalties that are associated with inflation due to depreciation at historical costs.     

The tale of two great crises

The Great Depression of 1929 and the Great Financial Crisis of 2008 have been the two big events of the last 75 years. Not only have they produced serious economic consequences but they also changed our view of economics and policymaking. The aim of this work is to compare these two great crises and highlight similarities as well as differences. Monetary policy, the exchange rate system and the role of banks are our fields of investigation. We find interesting parallels between the two big events but also differences in their specific developments.     

Protectionism — No Solution to De-Industrialisation

The increasing appeals for protection from international competition recall the follies of government and industry in the 1930s. Dr Forrest Capie challenges the conventional wisdom that attributes to protection the recovery from the 1930s Great Depression. He argues it was not resuscitation of old industries but the emergence of new industries that brought Britain out of the slump. Will Paul Channon learn the lesson?     

THE 1930s AND THE PRESENT DAY – CRISES COMPARED

Many analysts are comparing the deep crisis of our times with the crash of 1929 and the Great Depression that followed in the 1930s. They generally argue that Barack Obama is driving the world to recovery along Roosevelt's ‘state superiority’ line. Alas, today's crisis rings alarm bells for the manner in which we must manage the future of democracy, the state and markets. Markets cannot be ‘ordered about’ and when in the face of sound logic and practice an attempt is made to do just this, markets become refractory, or – even worse – they may collapse.     

全球金融危机的成因分析及其对我国银行业经营的影响与启示

此次全球金融危机是自20世纪30年代世界经济大萧条以来最为严重的全球金融危机,有着深刻的社会经济的根源。对全球金融危机的成因进行了分析,并针对我国银行业的现状研究总结其对我国商业银行经营的影响及启示。     

COMMODITY MARKET REGULATION AFTER FINANCIAL CRISIS: A COMPARATIVE APPROACH

The United States Federal Government has imposed remarkably similar regulations on commodity markets after financial crises, particularly after the Great Depression and the recent financial crisis beginning in 2007. A comparison of these two great economic recessions will help identify the changes in commodity regulation policy over the past century.