Journal Article

International aspects of the Great Depression and the crisis of 2007: similarities, differences, and lessons

Richard S. Grossman and Christopher M. Meissner

in Oxford Review of Economic Policy

Published on behalf of The Oxford Review of Economic Policy Ltd

Volume 26, issue 3, pages 318-338
Published in print January 2010 | ISSN: 0266-903X
Published online January 2010 | e-ISSN: 1460-2121 | DOI: http://dx.doi.org/10.1093/oxrep/grq021
International aspects of the Great Depression and the crisis of 2007: similarities, differences, and lessons

More Like This

Show all results sharing these subjects:

  • Economic Development and Growth
  • Public Economics
  • Political Economy
  • Public Policy

GO

Show Summary Details

Preview

We focus on two international aspects of the Great Depression—financial crises and international trade—and try to discern lessons for the current economic crisis. Both downturns featured global banking crises which were generated by boom–slump macroeconomic cycles. During both crises, world trade collapsed faster than world incomes and the trade decline was highly synchronized across countries. During the Depression income losses and rises in trade barriers explain trade’s collapse. Owing to vertical specialization and more intense trade in durables, today’s trade collapse is due to uncertainty and small shocks to trade costs hitting international supply chains. So far, the global economy has avoided the global trade wars and banking collapses of the Depression, perhaps owing to improved policy. Even so, the global economy remains susceptible to large shocks owing to financial innovation and technological change, as recent events illustrate.

Keywords: banking crises; gold standard; trade costs; trade collapse; vertical specialization; tariff retaliation; E42; E51; F33; F15; F36; F44; F02; F15; G21; G28; G01; N10

Journal Article.  10721 words.  Illustrated.

Subjects: Economic Development and Growth ; Public Economics ; Political Economy ; Public Policy

Full text: subscription required

How to subscribe Recommend to my Librarian

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.