Unfortunately Unfamiliar with Robert Higgs and Others: A Rejoinder to Gauti Eggertsson on the 1930s
AbstractIn this rejoinder, I address five issues raised by Eggertssonâ€™s reply to my commentary. First, I argue that the pre-Depression gold standard, though not ideal, was not a barrier to a desirable reflation. I then offer an account of the 1937-38 recession that views it as a continuation of the Roosevelt regime in a way that contradicts Eggertssonâ€™s attempt to cleave it from the expectations-enhancing regime change he focused on. I also respond to his invoking the â€œconventional wisdomâ€ regarding Hoover and Roosevelt by offering additional evidence that said wisdom is faulty. Fourth, I respond to his admission of ignorance of Robert Higgsâ€™s work by recapping and adding to the evidence for regime uncertaintyâ€™s role in extending the Great Depression (evidence notably about private investment and about private-sector hours worked). I critically assess the role investment played in Eggertssonâ€™s original AER article by noting his failure to distinguish government and private investment, as it was the latter that Higgs demonstrates was affected by regime uncertainty and whose weakness constituted the failed recovery. Finally, I note that if narrow methodological strictures blind us to the evidence provided by narrative history, we will fail to understand that history at our own peril, as the growing parallels between the Great Recession and the Great Depression demonstrate.
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Bibliographic InfoArticle provided by Econ Journal Watch in its journal Econ Journal Watch.
Volume (Year): 8 (2011)
Issue (Month): 1 (January)
depression; economic history; laissez-faire; public policy; Hoover; Roosevelt; Robert Higgs;
Find related papers by JEL classification:
- N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-
- N22 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: 1913-
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Michael D. Bordo & Ehsan U. Choudhri & Anna J. Schwartz, 1999.
"Was Expansionary Monetary Policy Feasible During the Great Contraction? An Examination of the Gold Standard Constraint,"
NBER Working Papers
7125, National Bureau of Economic Research, Inc.
- Bordo, Michael D. & Choudhri, Ehsan U. & Schwartz, Anna J., 2002. "Was Expansionary Monetary Policy Feasible during the Great Contraction? An Examination of the Gold Standard Constraint," Explorations in Economic History, Elsevier, Elsevier, vol. 39(1), pages 1-28, January.
- Gauti B. Eggertsson, 2008.
"Great Expectations and the End of the Depression,"
American Economic Review, American Economic Association,
American Economic Association, vol. 98(4), pages 1476-1516, September.
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