The story of the Great depression goes like this: the stock market crashed, a gigantic chunk of the money supply disappeared, people wanted their gold and gold flew away, every country in the world was in depression. That story is somewhat true while being woefully incomplete and misrepresenting at the same time.
Here is a possibly new explanation. If we take GDP before World War 1 for Western European countries and we give a yearly growth rate of 1.95% (which Barro defines as the normal trend in neoclassical growth model) and then apply a logarithmic scale to what happened and we look at the period 1913-1973 for observed GDP, we find the following (which I extracted from Ritschl 2008):
Here is a possibly new explanation. If we take GDP before World War 1 for Western European countries and we give a yearly growth rate of 1.95% (which Barro defines as the normal trend in neoclassical growth model) and then apply a logarithmic scale to what happened and we look at the period 1913-1973 for observed GDP, we find the following (which I extracted from Ritschl 2008):
So what we have is that 1913-1973 was pretty much a period of disappointing economic growth (and destruction because of two world wars). So here is a possible statement that could be analyzed : was the first half of the 20th century a long recession for Western European countries and that the Thirty Glorious Years were only a reconstruction and a catch-up?
