An Overview of the Great Depression. David C. Wheelock September 20, 2007. What makes a Depression Great?. Recession : When your neighbor loses his or her job. Depression : When you lose your job. Why study the Great Depression?. Worst economic disaster of the 20th century.
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David C. Wheelock
September 20, 2007
S&P Composite Index
Conclusion: Probably had some effect, but not big enough by itself.
$ value imports of 75 countries
i(nominal) – inflation rate = i(real)
e.g., 2% - (-10%) = 2% + 10% = 12%
Firms stopped investing in new buildings, equipment, etc.
Bankruptcies increased as borrowers lacked the incomes to repay their debts.
Banks failed because borrowers defaulted on their loans.
rising price level
falling real interest rate
and increased spending.
Business Investment, Billions of Dollars; Annual Data
Treasury bill yield minus inflation rate