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Accounting for the French Great Depression

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  • Slim BRIDJI

    (University of Paris X and EconomiX)

Abstract

To understand the driving forces of the French Great Depression, we use the business cycle accounting methodology (Chari et al. (2006)) which decomposes macroeconomic fluctuations into several wedges linked to specific markets and economic behaviors. The wedges associated with the efficiency in the final good production and the investment behavior are the major contributors to the downturn, but with opposite effects. The strongly depressive efficiency wedge would have lead to a deeper depression without the expansive investment wedge. This conclusion contrasts with previous analyses focusing on labor market changes to explain great depressions in France and the United States.

Suggested Citation

  • Slim BRIDJI, 2007. "Accounting for the French Great Depression," 2007 Meeting Papers 461, Society for Economic Dynamics.
  • Handle: RePEc:red:sed007:461
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    File URL: https://economicdynamics.org/meetpapers/2007/paper_461.pdf
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    References listed on IDEAS

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    1. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2002. "Accounting for the Great Depression (technical appendix)," Working Papers 619, Federal Reserve Bank of Minneapolis.
    2. Lawrence J. Christiano & Roberto Motto & Massimo Rostagno, 2003. "The Great Depression and the Friedman-Schwartz hypothesis," Proceedings, Federal Reserve Bank of Cleveland, pages 1119-1215.
    3. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2006. "Comparing alternative representations and alternative methodologies in business cycle accounting," Working Papers 647, Federal Reserve Bank of Minneapolis.
    4. Lawrence J. Christiano & Joshua M. Davis, 2006. "Two flaws in business cycle accounting," Working Paper Series WP-06-10, Federal Reserve Bank of Chicago.
    5. Casey B. Mulligan, 2002. "A Dual Method of Empirically Evaluating Dynamic Competitive Equilibrium Models with Market Distortions, Applied to the Great Depression & World War II," NBER Working Papers 8775, National Bureau of Economic Research, Inc.
    6. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2003. "Accounting for the Great Depression," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 2-8.
    7. 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.
    8. 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.
    9. Lawrence J. Christiano & Joshua M. Davis, 2006. "Two flaws in business cycle dating," Working Paper 0612, Federal Reserve Bank of Cleveland.
    10. 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.
    11. Edward C. Prescott, 1999. "Some observations on the Great Depression," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 25-29.
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