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Technological change and the roaring twenties: A neoclassical perspective

  • Harrison, Sharon
  • Weder, Mark

This paper addresses the causes of the Roaring Twenties in the United States. In particular, we use a version of the real business cycle model to test the hypothesis that an extraordinary pace of productivity growth was the driving factor. Our motivation comes from the abundance of evidence of significant technological progress during this period, fed by innovations in manufacturing and the widespread introduction of electricity. Our estimated total factor productivity series generate artificial model output that shows high conformity with the data: the model economy successfully replicates the boom years from 1922 to 1929.

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File URL: http://www.sciencedirect.com/science/article/B6X4M-4WGMB2P-1/2/eba3b4a08447a14014dc710f28d8be86
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Article provided by Elsevier in its journal Journal of Macroeconomics.

Volume (Year): 31 (2009)
Issue (Month): 3 (September)
Pages: 363-375

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Handle: RePEc:eee:jmacro:v:31:y:2009:i:3:p:363-375
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622617

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  3. Harold L. Cole & Lee E. Ohanian, 1999. "The Great Depression in the United States from a neoclassical perspective," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 2-24.
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  11. Mark Weder, 2006. "The Role Of Preference Shocks And Capital Utilization In The Great Depression," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(4), pages 1247-1268, November.
  12. Peter Temin, 2008. "Real Business Cycle Views of the Great Depression and Recent Events: A Review of Timothy J. Kehoe and Edward C. Prescott's Great Depressions of the Twentieth Century," Journal of Economic Literature, American Economic Association, vol. 46(3), pages 669-84, September.
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  16. Field, Alexander J., 2009. "US economic growth in the gilded age," Journal of Macroeconomics, Elsevier, vol. 31(1), pages 173-190, March.
  17. Oshima, Harry T., 1984. "The Growth of U.S. Factor Productivity: The Significance of New Technologies in the Early Decades of the Twentieth Century," The Journal of Economic History, Cambridge University Press, vol. 44(01), pages 161-170, March.
  18. John W. Kendrick, 1961. "Productivity Trends in the United States," NBER Books, National Bureau of Economic Research, Inc, number kend61-1, October.
  19. Harrison, Sharon G. & Weder, Mark, 2006. "Did sunspot forces cause the Great Depression?," Journal of Monetary Economics, Elsevier, vol. 53(7), pages 1327-1339, October.
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