Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/147486 
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Title: 

On the way to the Great Depression: The demand regime of the US economy (1900-1929)

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Year of Publication: 
2015
Series/Report no.: 
Working Paper No. 2015-02
Publisher: 
The University of Utah, Department of Economics, Salt Lake City, UT
Abstract: 
It has become commonplace to raise the analogy between the recent experience of the dynamics of income distribution and growth, and that of the era before the Great Depression. However, no study of the demand regime has been done for the early twentieth century period; this study attempts to fill that gap in the literature. Based on a Kaldroian model, I estimate whether the demand regime of the pre-Great Depression era for private domestic output was wage-led or debt-led. The results of the study show the demand regime was wage-led with a considerable role of private debt in driving aggregate demand. Furthermore, I discuss the Roaring Twenties period and argue that increased income inequality led to the rise of destabilizing channels that propped up demand which contributed to increasing economic fragility on the way to the Great Depression.
Subjects: 
Income distribution
Demand regime
Debt-led growth
Wage-led growth
Private debt
Great Depression
Roaring Twenties
JEL: 
E12
E22
D33
Document Type: 
Working Paper

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The document was removed on behalf of the author(s)/ the editor(s) on: June 13, 2017


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