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What - or who - started the great depression?

  • Ohanian, Lee E.

Herbert Hoover. I develop a theory of labor market failure for the Depression based on Hoover's industrial labor program that provided industry with protection from unions in return for keeping nominal wages fixed. I find that the theory accounts for much of the depth of the Depression and for the asymmetry of the depression across sectors. The theory also can reconcile why deflation/low nominal spending apparently had such large real effects during the 1930s, but not during other periods of significant deflation.

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File URL: http://www.sciencedirect.com/science/article/pii/S0022-0531(09)00121-5
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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 144 (2009)
Issue (Month): 6 (November)
Pages: 2310-2335

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Handle: RePEc:eee:jetheo:v:144:y:2009:i:6:p:2310-2335
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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  1. Casey B. Mulligan, 2005. "Public policies as specification errors," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(4), pages 902-926, October.
  2. Lucas, Robert E, Jr & Rapping, Leonard A, 1969. "Real Wages, Employment, and Inflation," Journal of Political Economy, University of Chicago Press, vol. 77(5), pages 721-54, Sept./Oct.
  3. Michael D. Bordo & Christopher J. Erceg & Charles L. Evans, 1997. "Money, sticky wages, and the Great Depression," Working Paper Series, Macroeconomic Issues WP-97-02, Federal Reserve Bank of Chicago.
  4. Kydland, Finn E. & Prescott, Edward C., 1988. "The workweek of capital and its cyclical implications," Journal of Monetary Economics, Elsevier, vol. 21(2-3), pages 343-360.
  5. William E. Kovacic & Carl Shapiro, 2003. "Antitrust Policy: A Century of Economic and Legal Thinking," Law and Economics 0303006, EconWPA.
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  8. V.V. Chari & Patrick J. Kehoe & Ellen McGrattan, 2004. "Business Cycle Accounting," NBER Working Papers 10351, National Bureau of Economic Research, Inc.
  9. Fumio Hayashi & Edward C. Prescott, 2002. "Data Appendix to The 1990s in Japan: A Lost Decade," Technical Appendices hayashi02, Review of Economic Dynamics.
  10. Eichengreen, Barry, 1996. "Golden Fetters: The Gold Standard and the Great Depression, 1919-1939," OUP Catalogue, Oxford University Press, number 9780195101133, December.
  11. Sanford M. Jacoby & Sunil Sharma, 1991. "Employment Duration and Industrial Labor Mobility in the United States, 1880-1980," UCLA Economics Working Papers 618, UCLA Department of Economics.
  12. Milton Friedman & Anna J. Schwartz, 1963. "A Monetary History of the United States, 1867–1960," NBER Books, National Bureau of Economic Research, Inc, number frie63-1, 08.
  13. Ben S. Bernanke, 1994. "The Macroeconomics of the Great Depression: A Comparative Approach," NBER Working Papers 4814, National Bureau of Economic Research, Inc.
  14. John W. Kendrick, 1961. "Productivity Trends in the United States," NBER Books, National Bureau of Economic Research, Inc, number kend61-1, 08.
  15. Fumio Hayashi & Edward C. Prescott, 2004. "The 1990s in Japan: a lost decade," Chapters, in: The Economics of an Ageing Population, chapter 2 Edward Elgar Publishing.
  16. Anthony Patrick O'Brien, 1989. "A Behavioral Explanation for Nominal Wage Rigidity During the Great Depression," The Quarterly Journal of Economics, Oxford University Press, vol. 104(4), pages 719-735.
  17. R. Anton Braun & Ellen R. McGrattan, 1993. "The Macroeconomics of War and Peace," NBER Chapters, in: NBER Macroeconomics Annual 1993, Volume 8, pages 197-258 National Bureau of Economic Research, Inc.
  18. Harold L. Cole & Lee E. Ohanian, 2004. "New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 779-816, August.
  19. Ralph C. Epstein & Florence M. Clark, 1934. "Industrial Profits in the United States," NBER Books, National Bureau of Economic Research, Inc, number epst34-1, 08.
  20. Reicher, Christopher Phillip, 2009. "Expectations, monetary policy, and labor markets: lessons from the Great Depression," Kiel Working Papers 1543, Kiel Institute for the World Economy (IfW).
  21. Simon, Curtis J., 2001. "The Supply Price Of Labor During The Great Depression," The Journal of Economic History, Cambridge University Press, vol. 61(04), pages 877-903, December.
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