lec_22_111B - ECN 111B: US Economic History since the ECN...

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Lecture 22 Lecture 22 The Great Depression (Continued) + The The Great Depression (Continued) + The Recovery Recovery ECN 111B: US Economic History since the ECN 111B: US Economic History since the Civil War Civil War Winter 2010 Winter 2010
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Lecture 22 Outline Lecture 22 Outline Monetary Theories/Banking Crises/Early (bad) Policy for Banking Crises The “Austrian” view How long did the Great Depression last? Causes of recovery Fiscal Policy Monetary and Financial Policies for Recovery The (First) New Deal The (Second) New Deal
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KEY Readings for Today’s KEY Readings for Today’s Lecture Lecture Essential Reading: Walton and Rockoff ch. 23 and ch. 24 Suggested Reading Atack and Passell ch. 22
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The Great Depression: Some The Great Depression: Some Figures Figures This is a watershed economic event The world economy has not seen anything as big since. Neither has the US. Real GDP falls by 25% (1929-1933). Industrial output falls by one half! (48%) (Gross) Investment falls from 18 to 1% of GDP Deflation: prices down by 33% Unemployment up to 25%
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Basic Macro Suggests we can Basic Macro Suggests we can “account” for a fall in income “account” for a fall in income Y = C + I +G + (EX – IM) Standard macro suggests that income depends on consumption, investment, government expenditures and net exports Changes in GDP depend on various multipliers
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Interest rate GDP IS (Investment Savings) LM (liquidity/money) The IS-LM Model The IS-LM Model
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What were the monetary shocks? What were the monetary shocks?
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lec_22_111B - ECN 111B: US Economic History since the ECN...

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