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Technological Change and the Roaring Twenties: A Neoclassical Perspective

  • Sharon Harrison

    ()

    (Department of Economics, Barnard College, Columbia University)

  • Mark Weder

    ()

    (School of Economics, University of Adelaide)

In this paper, we address 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 1922-1929.

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File URL: http://www.economics.adelaide.edu.au/research/papers/doc/wp2009-29.pdf
File Function: 2009
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Paper provided by University of Adelaide, School of Economics in its series School of Economics Working Papers with number 2009-29.

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Length: 27 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:adl:wpaper:2009-29
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Phone: (618) 8303 5540
Web page: http://www.economics.adelaide.edu.au/

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  2. Cooley, Thomas F, 1997. "Calibrated Models," Oxford Review of Economic Policy, Oxford University Press, vol. 13(3), pages 55-69, Autumn.
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  6. Mark Weder, 2004. "The Role of Preference Shocks and Capital Utilization in the Great Depression," CDMA Working Paper Series 200405, Centre for Dynamic Macroeconomic Analysis.
  7. Ellen R. M cG rattan & Lee E. Ohanian, 2010. "Does Neoclassical Theory Account For The Effects Of Big Fiscal Shocks? Evidence From World War Ii," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(2), pages 509-532, 05.
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  11. Lee E. Ohanian, 2001. "Why Did Productivity Fall So Much during the Great Depression?," American Economic Review, American Economic Association, vol. 91(2), pages 34-38, May.
  12. Bresnahan, Timothy F. & Raff, Daniel M. G., 1991. "Intra-Industry Heterogeneity and the Great Depression: The American Motor Vehicles Industry, 1929–1935," The Journal of Economic History, Cambridge University Press, vol. 51(02), pages 317-331, June.
  13. 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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  15. 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.
  16. Weir, David R., 1986. "The Reliability of Historical Macroeconomic Data for Comparing Cyclical Stability," The Journal of Economic History, Cambridge University Press, vol. 46(02), pages 353-365, June.
  17. John W. Kendrick, 1961. "Productivity Trends in the United States," NBER Books, National Bureau of Economic Research, Inc, number kend61-1, June.
  18. Field, Alexander J., 2009. "US economic growth in the gilded age," Journal of Macroeconomics, Elsevier, vol. 31(1), pages 173-190, March.
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  20. 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.
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