A Small Open Economy in Depression: Lessons from Canada in the 1930s
AbstractThis paper tests the hypothesis that idiosyncratic U.S. disturbances and their international propagation can account for the global Depression. Exploiting common stochastic trends in U.S. and Canadian interwar data, we estimate a small open economy model for Canada that decomposes output fluctuations into sources identifiable with world and country-specific disturbances. We find that the onset, depth and duration of output collapse in both Canada and the U.S. are primarily attributable to a common, permanent output shock leaving little significant role for idiosyncratic disturbances originating in either economy.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4515.
Date of creation: Nov 1993
Date of revision:
Publication status: published as Canadian Journal of Economics, vol. XXIX, no. 1, pp. 1-36, February 1996.
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Other versions of this item:
- Caroline M. Betts & Michael D. Bordo & Angela Redish, 1996. "A Small Open Economy in Depression: Lessons from Canada in the 1930s," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 29(1), pages 1-36, February.
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-
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