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Business cycle co-movement: Evidence from the Great Depression

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

Abstract

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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  • Mathy, Gabriel P. & Meissner, Christopher M., 2011. "Business cycle co-movement: Evidence from the Great Depression," Journal of Monetary Economics, Elsevier, vol. 58(4), pages 362-372.
    • Handle: RePEc:eee:moneco:v:58:y:2011:i:4:p:362-372
    DOI: 10.1016/j.jmoneco.2011.07.004
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    4. Albers, Thilo & Uebele, Martin, 2015. "The global impact of the great depression," LSE Research Online Documents on Economics 64491, London School of Economics and Political Science, LSE Library.
    5. Kris James Mitchener & Kirsten Wandschneider, 2024. "Currency Wars and Trade," CESifo Working Paper Series 11589, CESifo.
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    8. Caraiani, Petre & Călin, Adrian Cantemir, 2024. "The comovement of bubbles’ responses to monetary policy shocks," The North American Journal of Economics and Finance, Elsevier, vol. 74(C).

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