The Great Depression of the 1930s
The Great Depression of the 1930s is the deepest crisis faced by contemporary economies. Sometimes, it is also referred to as the ‘Great Crash’. Economic historians use the term ‘Great Depression’ for the prolonged deflationary phase from the 1870s to the 1890s but we will use the term to indicate the crisis of the 1930s, following the stock market crash at Wall Street of 1929. Though the Great Depression hit many countries, its epicentre was in the United States. To have an idea of the depth of the phenomenon, suffice it to observe that from the pre-crisis peak to the minimum touched in the course of the crisis US industrial production collapsed by 60 per cent. Such a dip was larger than the fall recorded in the other affected countries (Austria, Belgium, Canada, Czechoslovakia, Denmark, Finland, Germany, Greece, Hungary, Italy, Japan, the Netherlands, New Zealand, Poland, Romania, the United Kingdom and several others). In addition, the USA was also the last country to emerge from the depression with industrial production resuming its pre-crisis level only by 1937 (Romer, 1993).
KeywordsMonetary Policy Banking System Real Interest Rate Great Depression Stock Market Crash
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