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EH447, 08/09 Great Depressions in Economic History

This course examines the Great Depressions that occurred in the US and Europe, analyzing their causes, consequences, and comparing the experiences of different countries. Topics covered include monetary policies, housing bubbles, stock market crashes, financial accelerators, Keynesianism, labor markets, and the long-term effects of the two World Wars. Course materials are available on Moodle and the instructor's personal website at the LSE.

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EH447, 08/09 Great Depressions in Economic History

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  1. EH447, 08/09 Great Depressions in Economic History Introduction Albrecht Ritschl

  2. Course outline Week 2-1: Introduction Weeks 2-2 through 6: The U.S. Depression Weeks 7-8: Europe and the Great Depression Weeks 9-10: Project presentations Summer Term: Exam

  3. Course Outline (cont’d) Week 2-2 Hayek v Friedman: Was Money Too Tight Or Too Strict? Week 3-1 Revisiting the Monetary Hypothesis Week 3-2 A Housing Bubble? Keynesianism v Fisher Week 4-1 A Bubble in the 1929 Stock Market? Week 4-2 It’s Crunch Time, Ben: The Financial Accelerator Week 5-1 Revisiting the Financial Accelerator Hypothesis Week 5-2 Animal Spirits? The Keynesian Hypothesis Revisited Week 6-1 Labour Markets and the Great Depression: the Minnesota View Week 6-2 Monopoly Power and Trade Unionism: A Modified Supply Side View

  4. Course Outline (Cont’d) Weeks 7-8: Europe and the Great Depression Week 7-1 Europe and the Great Depression Week 7-2 A Tale of Two Recoveries: the U.S. and Germany, 1933-1937 Week 8-1 Europe’s Great Depression, 1920-1960; A Long Term View Week 8-2 The Macroeconomic Effects of the two World Wars Weeks 9-10: Project Presentations by Students

  5. Course Material • Coming soon: on Moodle • To be mirrored on my personal website at the LSE

  6. Observations • The trend line is “counterfactual”, derived from theory • Neoclassical Growth Theory: steady state growth of output per capita is around 2 % per year • In a linear chart, this yields an exponential function with ever-increasing slope

  7. Observations • Logarithmic y scale: constant percentage growth is translated into constant slope • Exponential functions now become straight lines • The 2% trend is thus now a straight upward sloping line • Neoclassical Growth Theory: slope of this line is around 2 % per year (here a bit smaller) • Depressions and upswings look a bit compressed

  8. Deviations from Trend • Now have trend as horizontal line • Look at cycles as deviation from trend Surprising result: find Europe in recession from 1920 to1945

  9. Other important trends • First (logarithmic) differences • Hodrick/Prescott filter • Bandpass filters • In all cases, define cycles as deviations from trend (we will see this in more detail) • Vs. NBER definition: recession if negative rates of change in two subsequent quarters

  10. The special case of Britain • Britain the first industrializer • Growth and productivity slowdown in late 19th century, subsequent acceleration • Low British trend growth 1920-80 drags down European average • Reversed if allow for structural breaks, but highly doubtful concept

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