We are only beginning to get a sense of what we would need to understand and see why these effects were as large as they were quantitatively in an economy that was presumably more flexible than the one we have today. With respect to the recovery, the gold standard had a lot to say about that.It is interesting that Bernanke would say that the economy was more flexible back then; that seems to run counter to the conventional wisdom that today's markets are the most flexible. It seems that there is room for worthwhile research to be done...
Wednesday, May 30, 2007
Economics of the Great Depression: worth rethinking
Over at Econbrowser, the poster mentions a new book Economics of the Great Depression...and posts some discussion of the issues in the context of an interview that was a source for the book. The post quotes Fed Chair Bernanke regarding understanding the Great Depression: