Great Depression
Explanations: the question of causation
There have been a great number of attempts to establish the cause of what has come to be seen as an unprecedented self-inflicted injury, and a great deal of disagreement. However, the unprecedented feature of the great depression was not its initiation (there had been a succession of recessions in the United States throughout the previous eighty years [1], and it was no worse in its early months than the preceding recession of 1921 [2]) - but, rather, its persistent depth. That consideration and others suggest that any search for a single cause is likely to be confusing and inconclusive. For example, although the popular view that it was initiated by the stock market crash can be shown to be mistaken [3], it would be unreasonable to dismiss the possibility that the crash contributed to its subsequent severity. Similarly, it can reasonably supposed that although the 1931 banking panic could not have started the great depression, it may well have made a causative contribution to its subsequent development.
- ↑ US Business Cycle Expansions and Contractions NBER 2008
- ↑ J R Vernon: The 1920-21 Deflation, Economic Inquiry, July, 1991
- ↑ Because the economic downturn started before the crash - see the paragraph on the crash on the tutorials suppage