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What - or who - started the great depression?

Listed author(s):
  • 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. Fumio Hayashi & Edward C. Prescott, 2000. "The 1990s in Japan: a lost decade," Working Papers 607, Federal Reserve Bank of Minneapolis.
  2. 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.
  3. Barry Eichengreen, 1992. "Golden Fetters: The Gold Standard and the Great Depression, 1919-1939," NBER Books, National Bureau of Economic Research, Inc, number eich92-1, April.
  4. Fumio Hayashi & Edward C. Prescott, 2002. "Data Appendix to The 1990s in Japan: A Lost Decade," Technical Appendices hayashi02, Review of Economic Dynamics.
  5. Bernanke, Ben S, 1995. "The Macroeconomics of the Great Depression: A Comparative Approach," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(1), pages 1-28, February.
  6. Victoria Osuna Padilla & José-Víctor Ríos-Rull, 2002. "Implementing the 35 Hour Workweek by Means of Overtime Taxation," Economic Working Papers at Centro de Estudios Andaluces E2002/04, Centro de Estudios Andaluces.
  7. John W. Kendrick, 1961. "Productivity Trends in the United States," NBER Books, National Bureau of Economic Research, Inc, number kend61-1, April.
  8. Christopher J. Erceg & Michael D. Bordo & Charles L. Evans, 2000. "Money, Sticky Wages, and the Great Depression," American Economic Review, American Economic Association, vol. 90(5), pages 1447-1463, December.
  9. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2002. "Business cycle accounting," Working Papers 625, Federal Reserve Bank of Minneapolis.
  10. Ralph C. Epstein & Florence M. Clark, 1934. "Industrial Profits in the United States," NBER Books, National Bureau of Economic Research, Inc, number epst34-1, April.
  11. Jacoby, Sanford M. & Sharma, Sunil, 1992. "Employment Duration and Industrial Labor Mobility in the United States, 1880–1980," The Journal of Economic History, Cambridge University Press, vol. 52(01), pages 161-179, March.
  12. William E. Kovacic & Carl Shapiro, 2003. "Antitrust Policy: A Century of Economic and Legal Thinking," Law and Economics 0303006, EconWPA.
  13. 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.
  14. 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.
  15. 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.
  16. 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.
  17. 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).
  18. Paul Lanoie & Francois Raymond & Bruce Shearer, 2001. "Work sharing and productivity: evidence from firm level data," Applied Economics, Taylor & Francis Journals, vol. 33(9), pages 1213-1220.
  19. 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, April.
  20. 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 721-754, Sept./Oct.
  21. 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.
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