ACCOUNTING FOR THE GREAT-DEPRESSION - A HISTORICAL DECOMPOSITION

This paper answers two distinct questions. First, To what extent do th eories of the Great Depression account for movements in output during 1929:10-1933:12? Second, How much of the Depression could have been av oided if the money stock had grown along its anticipated pre-1929:9 pa th? The results reveal that an eclectic view of the Depression dominat es mono-causal explanations. Counterfactual simulations indicate much of the Depression would have been avoided if money growth had been mai ntained along its pre-Depression path.