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Title:What ended the great depression? Reevaluating the role of fiscal policy PDF Logo
Authors:Perry, Nathan
Vernengo, Matías
Issue Date:2011
Series/Report no.:Working paper, Levy Economics Institute 678
Abstract:Conventional wisdom contends that fiscal policy was of secondary importance to the economic recovery in the 1930s. The recovery is then connected to monetary policy that allowed non-sterilized gold inflows to increase the money supply. Often, this is shown by measuring the fiscal multipliers, and demonstrating that they were relatively small. This paper shows that problems with the conventional measures of fiscal multipliers in the 1930s may have created an incorrect consensus on the irrelevance of fiscal policy. The rehabilitation of fiscal policy is seen as a necessary step in the reinterpretation of the positive role of New Deal policies for the recovery.
Subjects:fiscal policy
Great Depression
JEL:E62
E63
N12
Document Type:Working Paper
Appears in Collections:Working Papers, Levy Economics Institute of Bard College

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