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Business cycle co-movement: Evidence from the Great Depression

  • Mathy, Gabriel P.
  • Meissner, Christopher M.

Recent analysis focuses on the gold standard as a channel for the transmission of the Great Depression. Trade linkages, which loom large in the recent literature, play a smaller role. Both the gold standard and trade were associated with higher co-movement at the bilateral level during the entire interwar period. We document that fixed exchange rates and trade made a comeback after 1932, but co-movement declined. The fall after 1932 appears to be driven by the rise of smaller blocs based on monetary and trade cooperation and an accompanying fall in co-movement between blocs.

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Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 58 (2011)
Issue (Month): 4 ()
Pages: 362-372

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Handle: RePEc:eee:moneco:v:58:y:2011:i:4:p:362-372
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505566

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