Reflections on the Great Depression

Reflections on the Great Depression

Randall E. Parker

This book explores the most prominent economic explanations of the Great Depression and how it affected the lives, experiences, and subsequent thinking of economists who lived through that era. Presented in interview format, this collection of conversations with Moses Abramovitz, Morris Adelman, Milton Friedman, Albert Hart, Charles Kindleberger, Wassily Leontief, Paul Samuelson, Anna Schwartz, James Tobin, Herbert Stein and Victor Zarnowitz provides a record of their reflections on the economics of the Great Depression and on the major events which occurred during those critical years. This volume is also another chapter in the legacy of the interwar generation of economists and is intended as a token of gratitude for the contributions they have made to the economics profession. Randall Parker has given us a window into the lives of these gifted scholars and an important glimpse into the world that shaped them.

Chapter 1: An Overview of the Great Depression

Randall E. Parker

Subjects: economics and finance, economic psychology


It has been said in many places, and without controversy, that the Great Depression provided the fertile ground from which modern macroeconomics sprouted. In addition, the Depression produced the economists ofthe twentieth century who began and nurtured the economic literature on the Great Depression in particular, and the development of modern macroeconomics in general. This book contains interviews with I 1 of the leading economists of the twentieth century who lived through and were ‘trained during the Depression era: Paul Samuelson, Milton Friedman, Moses Abramovitz, Albert Hart, Charles Kindleberger, Anna Schwartz, James Tobin, Wassily Leontief, Morris Adelman, Herbert Stein, and Victor Zarnowitz. The purpose of this book is to provide a record of their reflections on the Great Depression. If, as Ben Bernanke (1 995) has said, understanding the Great Depression is “the Holy Grail of macroeconomics,7’we have the opportunity to pose questions on these matters to some of the very first individuals who began the search for the Holy Grail and lived the events. There are many questions of interest and each person has a story to tell regarding how the Depression affected them. We will turn our attention to these individuals in the interviews that follow. Before we do, however, it is important to provide some historical and theoretical background for the interviews. This chapter provides an overview of selected events and economic explanations of the interwar era, so that the reader can put the substance of the interviews into proper context. What follows is not intended...

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