The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Great Depression, Monetary and Financial Forces In

  • Satyajit Chatterjee
  • P. Dean Corbae
Reference work entry


We survey papers that seek model-based answers to the following questions regarding the Great Depression. What caused the worldwide collapse in output from 1929 to 1933? Why was the recovery from the trough of 1933 so protracted for the United States? How costly are Depression-like episodes in terms of welfare? Was the decline in output preventable? The papers point to: an important, but not exclusive, role of monetary factors in causing the decline; counterproductive labour market interventions in making the recovery slow; uninsured risk of unemployment in making Depression-like episodes costly; timely provision of liquidity as a preventive policy.


Confidence Debt-deflation hypothesis Depressions Dynamic stochastic general equilibrium (DSGE) model Financial intermediation Gold standard Great Depression Liquidity preference Monetary and financial forces in the Great Depression Monetary base Money multiplier Multiple equilibria Sticky wages Total factor productivity 

JEL Classifications

D4 D10 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Satyajit Chatterjee
    • 1
  • P. Dean Corbae
    • 1
  1. 1.