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The Impact of Cartelization, Money, and Productivity Shocks on the International Great Depression

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  • Harold L. Cole
  • Lee E. Ohanian

Abstract

This study exploits panel data from 18 countries to assess the contributions of cartelization policies, monetary shocks, and productivity shocks on macroeconomic activity during the Great Depression. To construct a parsimonious and common model framework, we use the fact that many cartel policies are observationally equivalent to a country-specific labor tax wedge. We estimate a monetary DSGE model with cartel wedges along with productivity and monetary shocks. Our main finding is that cartel policy shocks account for the bulk of the Depression in the countries that adopted significant cartel policies, including the large depressions in the U.S., Germany, Italy, and Australia, and that the estimated cartel policy shocks plausibly coincide with the actual evolution of policies in these countries. In contrast, cartel policy shocks in the countries that did not significantly change policies were small and account for little of their Depressions.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18823.

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Date of creation: Feb 2013
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Handle: RePEc:nbr:nberwo:18823

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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. The Impact of Cartelization, Money, and Productivity Shocks on the International Great Depression
    by Christian Zimmermann in NEP-DGE blog on 2013-03-18 18:53:57
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Cited by:
  1. Alex Klein & Keisuke Otsu, 2013. "Efficiency, Distortions and Factor Utilization during the Interwar Period," Studies in Economics, Department of Economics, University of Kent 1317, Department of Economics, University of Kent.
  2. Klein, Alexander & Otsuy, Keisuke, 2013. "Efficiency, Distortions and Factor Utilization during the Interwar Period," CAGE Online Working Paper Series, Competitive Advantage in the Global Economy (CAGE) 147, Competitive Advantage in the Global Economy (CAGE).

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