Deflation and the international great depression
Subtitle: a productivity puzzle
By: Harold L. Cole, Lee E. Ohanian, and Ron Leung.
Contributors: Ohanian, Lee E.; Leung, Ron.
Series: Federal Reserve Bank of Minneapolis, Research Department staff report ;; 356; Staff report (Federal Reserve Bank of Minneapolis. Research Dept. : Online) ;; 356.
Publisher: Federal Reserve Bank of Minneapolis
Published: 2005
Place of publication: [Minneapolis, Minn.]
Language: eng
Format: Electronic resource
Subjects: Depressions -- 1929.; Deflation (Finance)
Description: "This paper presents a dynamic, stochastic general equilibrium study of the causes of the international Great Depression. We use a fully articulated model to assess the relative contributions of deflation/monetary shocks, which are the most commonly cited shocks for the Depression, and productivity shocks.We find that productivity is the dominant shock, accounting for about 2/3 of the Depression, with the monetary shock accounting for about 1/3.The main reason deflation doesn't account for more of the Depression is because there is no systematic relationship between deflation and output during this period.Our finding that a persistent productivity shock is the key factor stands in contrast to the conventional view that a continuing sequence of unexpected deflation shocks was the major cause of the Depression.We also explore what factors might be causing the productivity shocks.We find some evidence that they are largely related to industrial activity, rather than agricultural activity, and that they are correlated with real exchange rates and non-deflationary shocks to the financial sector"--Federal Reserve Bank of Minneapolis web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 2/7/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.