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Title:Did sunspot cause the Great Depression? PDF Logo
Authors:Harrison, Sharon G.
Weder, Mark
Issue Date:2002
Series/Report no.:Discussion Papers, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes 2002,35
Abstract:We apply a dynamic general equilibrium model to the period of the Great Depression. In particular, we examine a modification of the real business cycle model in which the possibility of indeterminacy of equilibria arises. In other words, agents' self-fulfilling expectations can serve as a primary impulse behind fluctuations. We find that the model, driven only by these measured sunspot shocks, can explain well the entire Depression era. That is, the decline from 1929-1932, the subsequent slow recovery, and the recession that occurred in 1937-1938.
Subjects:Great Depression
Sunspots
Dynamic General Equilibrium
JEL:E32
N12
Persistent Identifier of the first edition:urn:nbn:de:kobv:11-10048937
Document Type:Working Paper
Appears in Collections:Discussion Papers, SFB 373, HU Berlin

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