Disequilibrium dynamics during the Great Depression

Article Abstract:

The Great Depression was caused by the economic system becoming dynamically neutral, and not self-correcting, rather than being due to nominal rigidity of prices and wages, according to a test using econometric techniques. No exogenous explanation is needed to understand the crisis, rather, the cause is endogenous. The focus should be on aggregate dynamics during the Depression, rather than on trigger factors, and there is also a need to understand why the dynamics of the system were neutral in this period.

Commercial nonphysical research, Depressions, Economic depressions

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Consumption, liquidity constrainst and economic development

Article Abstract:

There appears to be an inverse relationship between how tight liquidity constraints are, and levels of economic development, according to a survey of fifty nine countries, with more sensitivity in low-income countries. Fiscal policy, such as increased state spending, or reductions in taxes, are thus likely to have more impact, while a given reduction in income is likely to have a greater effect on consumption, where there is a higher proportion of consumers suffering from constraints on their liquidity.

EXECUTIVE, LEGISLATIVE, AND GENERAL, Economic aspects, Fiscal policy

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