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The Role Of Preference Shocks And Capital Utilization In The Great Depression

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  • Mark Weder

Abstract

The article examines the proposition that preference shocks play a central role in our understanding of the Great Depression. I identify a series of unusually large negative shocks that destabilized the U.S. economy during the 1930s. When the artificial economy is paired with variable capital utilization and mildly increasing returns to scale in production, it is able to account for most of the decline in economic activity and it predicts a tepid recovery. Copyright 2006 by the Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association.

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Bibliographic Info

Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 47 (2006)
Issue (Month): 4 (November)
Pages: 1247-1268

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Handle: RePEc:ier:iecrev:v:47:y:2006:i:4:p:1247-1268

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Citations

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Cited by:
  1. Harrison, Sharon & Weder, Mark, 2009. "Technological change and the roaring twenties: A neoclassical perspective," Journal of Macroeconomics, Elsevier, vol. 31(3), pages 363-375, September.
  2. Klein, Alexander & Otsuy, Keisuke, 2013. "Efficiency, Distortions and Factor Utilization during the Interwar Period," CAGE Online Working Paper Series 147, Competitive Advantage in the Global Economy (CAGE).
  3. Alex Klein & Keisuke Otsu, 2013. "Efficiency, Distortions and Factor Utilization during the Interwar Period," Studies in Economics 1317, Department of Economics, University of Kent.
  4. Özer Karagedikli & Troy Matheson & Christie Smith & Shaun P. Vahey, 2007. "RBCs and DSGEs:The Computational Approach to Business Cycle Theory and Evidence," Reserve Bank of New Zealand Discussion Paper Series DP2007/15, Reserve Bank of New Zealand.
  5. repec:cge:warwcg:146 is not listed on IDEAS
  6. Fabien Tripier, 2009. "Elasticity of factor substitution and the rise in labor's share of income during the Great Depression," Working Papers hal-00419343, HAL.
  7. Bridji, Slim, 2013. "The French Great Depression: A business cycle accounting analysis," Explorations in Economic History, Elsevier, vol. 50(3), pages 427-445.

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