1. EH447, 08/09 Great Depressions in Economic History Introduction Albrecht Ritschl

2. Course outline Week 2-1: Introduction Weeks 2-2 through 6: The U.S. Depression Weeks 7-8: Europe and the Great Depression Weeks 9-10: Project presentations Summer Term: Exam

3. Course Outline (cont’d) Week 2-2 Hayek v Friedman: Was Money Too Tight Or Too Strict? Week 3-1 Revisiting the Monetary Hypothesis Week 3-2 A Housing Bubble? Keynesianism v Fisher Week 4-1 A Bubble in the 1929 Stock Market? Week 4-2 It’s Crunch Time, Ben: The Financial Accelerator Week 5-1 Revisiting the Financial Accelerator Hypothesis Week 5-2 Animal Spirits? The Keynesian Hypothesis Revisited Week 6-1 Labour Markets and the Great Depression: the Minnesota View Week 6-2 Monopoly Power and Trade Unionism: A Modified Supply Side View

4. Course Outline (Cont’d) Weeks 7-8: Europe and the Great Depression Week 7-1 Europe and the Great Depression Week 7-2 A Tale of Two Recoveries: the U.S. and Germany, 1933- 1937 Week 8-1 Europe’s Great Depression, 1920-1960; A Long Term View Week 8-2 The Macroeconomic Effects of the two World Wars Weeks 9-10: Project Presentations by Students

5. Course Material  Coming soon: on Moodle  To be mirrored on my personal website at the LSE

7. Observations  The trend line is “counterfactual”, derived from theory  Neoclassical Growth Theory: steady state growth of output per capita is around 2 % per year  In a linear chart, this yields an exponential function with ever- increasing slope

9. Observations  Logarithmic y scale: constant percentage growth is translated into constant slope  Exponential functions now become straight lines  The 2% trend is thus now a straight upward sloping line  Neoclassical Growth Theory: slope of this line is around 2 % per year (here a bit smaller)  Depressions and upswings look a bit compressed

11. Deviations from Trend  Now have trend as horizontal line  Look at cycles as deviation from trend Surprising result: find Europe in recession from 1920 to1945

12. Other important trends  First (logarithmic) differences  Hodrick/Prescott filter  Bandpass filters  In all cases, define cycles as deviations from trend (we will see this in more detail)  Vs. NBER definition: recession if negative rates of change in two subsequent quarters

13. The special case of Britain  Britain the first industrializer  Growth and productivity slowdown in late 19 th century, subsequent acceleration  Low British trend growth 1920-80 drags down European average  Reversed if allow for structural breaks, but highly doubtful concept