Journal of Economic Perspectives: Vol. 7 No. 2 (Spring 1993)


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Financial Factors in the Great Depression

Article Citation

Calomiris, Charles W. 1993. "Financial Factors in the Great Depression." Journal of Economic Perspectives, 7(2): 61-85.

DOI: 10.1257/jep.7.2.61


Macroeconomists have long argued that financial markets were important sources and propagators of decline during the Great Depression. Turning points during the Depression often coincided with or were preceded by dramatic events in financial markets: stock market collapse, waves of bankruptcy and bank failure, and contractions in the money stock. But the mechanism through which financial factors contributed to the Depression has been a source of controversy, as has been the relative importance of financial factors in explaining the origins and persistence of the Depression. This essay reviews the literature on the role of financial factors in the Depression and draws some lessons that have more general relevance for the study of the Depression and for macroeconomics.

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Calomiris, Charles W. (U IL and NBER)

JEL Classifications

N12: Economic History: Macroeconomics; Growth and Fluctuations: U.S.; Canada: 1913-
E32: Business Fluctuations; Cycles
E44: Financial Markets and the Macroeconomy


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