1994/08/01 by Ben S. Bernanke, Ben Bernanke · 5 citations
Economics, Econometrics and Finance · #Aggregate demand #Deflation #Depression (economics) #Economic Theory and Policy #Economics #Financial crisis #Great Depression #Italy: Economic History and Contemporary Issues #Keynesian economics #Macroeconomics #Monetary Policy and Economic Impact #Monetary economics #Monetary policy #Political science #Supply side #Unemployment
paper · open access · doi:10.2307/2077848
published in Journal of money credit and banking 27(1), 1 (Wiley)
openalex publication_date 1994/08/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/04
Recently, research on the causes of the Great Depression has shifted from a heavy emphasis on events in the United States to a broader, more comparative approach that examines the interwar experiences of many countries simultaneously. In this lecture I survey the current state of our knowledge about the Depression from a comparative perspective. On the aggregate demand side of the economy, comparative analysis has greatly strengthened the empirical case for monetary shocks as a major driving force of the Depression; an interesting possibility suggested by this analysis is that the worldwide monetary collapse that began in 1931 may be interpreted as a jump from one Nash equilibrium to another. On the aggregate supply side, comparative empirical studies provide support for both induced financial crisis and sticky nominal wages as mechanisms by which nominal shocks had real effects. Still unresolved is why nominal wages did not adjust more quickly in the face of mass unemployment.