Custom essays: The Great Depression

The Great Depression was the global economic crisis that began in 1929 and ended only in the second half of 1930. It greatly affected the most developed Western countries, including USA, UK, Germany and France, and other countries. The industrial cities were affected the most as the construction almost stopped. Because of falling demand, the prices of agricultural products decreased by 40-60%.
The main causes of the Great Depression are: lack of money; the crisis of overproduction; the rapid population growth; the adoption of the Smoot-Hawley Law in 1930 and other.
The results of the global economic crisis were awful: the industrial production had dropped to the level of the early 20th century; more than 30 million people were unemployed in western countries; the situation of farmers, petty traders, and the middle class worsened; many people were below the poverty line; the disappointment in the effectiveness of economic reforms appeared in the society.

Annotated Bibliography:

Romer, Christina D. What Ended the Great Depression? The Journal of Economic History. (1992), 52: 757-784.
Christina D. Romer examines the role of aggregate-demand stimulus in ending the Great Depression. The main finding of the research is that plausible estimates of the effects of fiscal and monetary changes indicate that nearly all the observed recovery of the U.S. economy prior to 1942 was due to monetary expansion. A huge gold inflow in the mid- and late 1930s swelled the money stock and stimulated the economy by lowering real interest rates and encouraging investment spending and purchases of durable goods. The author proves that those monetary developments were crucial to the recovery implies that self-correction played little role in the growth of real output between 1933 and 1942.

Eichengreen, Barry., Temin, Peter. The Gold Standard and the Great Depression.Contemporary European History (2000), 9: 183-207.
Barry Eichengreen and Peter Temin explain why political leaders and central bankers continued to adhere to the gold standard as the Great Depression intensified. They focus on the reasons why policy makers chose the policies they did. They argue that the mentality of the gold standard was pervasive and compelling to the leaders of the interwar economy. It was expressed and reinforced by the discourse among these leaders. It was opposed and finally defeated by mass politics, but only after the interaction of national policies had drawn the world into the Great Depression.

Madsen, Jakob. B. Price and wage stickiness during the Great Depression. European Review of Economic History (2004), 8: 263-295.
Jacob B. Madsen examines the relative importance of sticky wages and sticky prices in explaining the length and the depth of the Great Depression. The author mentions that econometric evidence shows that the supply failure was an outcome of widespread price stickiness and that wage stickiness only played a minor role as a propagating factor during the first years of the Depression. It is written that microeconomic evidence suggests that there was widespread and increasing industrial concentration during the interwar period.

Madsen, Jakob B. Agricultural crisis and the International transmission of the Great Depression. The Journal of Economic History (2001), 61: 327-365.
Jakob B. Madsen explains the role of the agricultural crisis in the international transmission of the Great Depression and assesses the direct and indirect macroeconomic effects of the agricultural price decline. Using panel data for 16 countries, the article shows that the decline in agricultural prices adversely affected the general price level, consumption and investment. Furthermore, it is shown that the agricultural price decline was an important vehicle by which the Depression was transmitted internationally.

Ferderera, J. Peter., Zalewskia, David A. Uncertainty as a Propagating Force in The Great Depression. The Journal of Economic History (1994), 54: 825-849.
J. Peter Ferderera and David A. Zalewskia, argue that the banking crises and collapse of the international gold standard in the early 1930s contributed to the severity of the Great Depression by increasing interest-rate uncertainty. They provide two pieces of evidence that support this conclusion. First, uncertainty (as measured by the risk premium embedded in the term structure of interest rates) rises during the banking crises and is positively linked to financial-market volatility associated with the breakdown in the gold standard. Second, the risk premium explains a significant proportion of the variation in aggregate investment spending during the Great Depression.

Mitchener, Kris James. Bank Supervision, Regulation, and Instability during the Great Depression. The Journal of Economic History (2005), 65: 152-185.
Kris James Mitchener explains in the article that even after controlling for local economic conditions, differences in supervision and regulation help explain the large variation in state bank suspension rates across U.S. counties during the Great Depression. More stringent capital requirements lowered suspension rates whereas laws prohibiting branch banking and imposing high reserve requirements raised them.

Simon, Curtis J. The Supply Price of labor during the Great Depression. The Journal of Economic History (2001), 61: 877-903.
Curtis J. Simon in the article presents somewhat-more-direct evidence than has been available on the supply price of labor during the Depression. The new data comprise wages asked from situations-wanted ads for female clerical workers. It is examined that between 1929 and 1933 annual average clerical wages asked fell nominally by nearly 58 percent, markedly lower than wages of new or existing employees. It is mentioned that neither changes in labor quality nor self-selection explains the decline.

Field, Alexander J. A New Interpretation of the Onset of the Great Depression. The Journal of Economic History. (1984). 44: 489-498.
Alexander J. Field explains that over the 1919–1929 period, fluctuations in the value of stock trading on the New York Stock Exchange exercised statistically significant and economically important impacts on the demand to hold cash balances. He tells that the marked post–1925 rise in the volume and value of stock trading led to a measurable increase in the transactions demand to hold cash balances, an increase in demand not recognized or seriously discussed by individuals inside or outside of the system.