A long depression or just a deceiving first half-century?

mardi 10 novembre 2009 ·

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):

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?

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Bryan Breguet est candidat au doctorat en sciences économiques à l’université de Colombie-Britannique. D’origine Suisse, il a passé les cinq dernières années au Québec au cours desquelles il s’est engagé en politique provinciale malgré le fait qu’il ne possédait pas encore la citoyenneté canadienne. Il détient un B.Sc en économie et politique ainsi qu’une maitrise en sciences économiques de l’université de Montréal. Récipiendaire de plusieurs prix d’excellences et bourses, il connaît bien les méthodes quantitatives et leurs applications à la politique.

Vincent Geloso holds a master’s degree in economic history from the London School of Economics, with a focus on business cycles, international development, labor markets in preindustrial Europe and the new institutional economics. His research work examined the economic history of the province of Quebec from 1920 to 1960. He holds a bachelor’s degree in economics and political science from the Université de Montréal. He has also studied in the United States at the Washington Centre for Academic Seminars and Internships. Mr. Geloso has been an intern for the Prime Minister’s cabinet in Ottawa and for the National Post. He has also been the recipient of a fellowship from the Institute for Humane Studies and an international mobility bursary from the Ministère des Relations internationales du Québec. Currently, he is an economist at the Montreal Economic Institute.

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