Task: Use the macroeconomic tools surveyed in BS 202 to explain the Great Depression of the 1930s, and comment on the extent to which this historical episode is relevant (if at all) for modern policy makers.
PLEASE READ
Student notes from BS202 class notes:
– Please use relevant models/ graphs within the essay
o Contrast two options in depression (deflation or fiscal policy)
– Several relationship graphs were used as examples affecting the Great Depression, including:
o Short Run Aggregate Supply models within AD-AS framework
Collapse in AD in 1930s
o ISLM model and the AD curve to explain the SR and LR within the Neoclassical Synthesis
Consider a massive fall in I following the change in animal spirits in 1929 (collapse in consumer durables, stock market crash uncertainty, a version of the paradox of thought responds.
*Australia was down turning as agricultural dominance was decreasing, dust bowl – overharvesting biting farmers in arse
Consider a fall in M following the Bank Runs 1930-33 (deflation)
o Attention to Keynes, Friedman, fiscal/ monetary policy, deflation
o QTM (QTM classical (Md=f(Y)) vs. reject QTM in Keynesian (Md = Mde+ MdT) – Friedman used the Keynesian concepts to reassure the QTM
o Q ratio went from above 1 to below 1 – investment spending collapsed
Word Limit: 2000 words.
6. Unit Program
WEEK TOPICS/CONTENT/LEARNING EXPERIENCES
Lecture Topic Tutorials/Reading
1
27/07/15
Introduction to Macroeconomics and the National Accounts
Chapters 1 and 2
2
03/08/15
The Classical Model: the Clearing of the Factor Markets
Chapter 3
3
10/08/15
The Classical Model: the Clearing of the Loanable & Product Markets.
Chapters 4
4
17/08/15
The Keynesian Revolution: Uncertainty, 45-Deg. Model and Effective Demand
Chapter 5
5
24/08/15
The Neoclassical Synthesis: the ISLM Model
Chapters 6
NB: classes will be held on the Monday
6
31/08/15
The Neoclassical Synthesis: Fiscal & Monetary Policy
Chapter 7
7
07/09/15
Mid-Semester Exam
Mid-Semester Exam
8
14/09/15
The Neoclassical Synthesis: Deriving the AD Curve
Chapter 8
9
21/09/15
The Neoclassical Synthesis: Deriving the AS Curve
Chapters 8
NON-TEACHING WEEK
10
05/10/15
The Monetarist Counter-Revolution & the New Classical Model
Chapter 9, 10 and 11
11
12/11/15
The Real Business Cycle and New Keynesian Models
Teaching and/or Unit Evaluations
Chapters 12 and 13
Teaching and/or Unit Evaluations
12
19/10/15
Moving from a Closed to an Open Economy
Teaching and/or Unit Evaluations
Chapters 14 and 15
Teaching and/or Unit Evaluations
13
26/10/15
Moving Towards the Very Long Run—Growth
Chapters 19 and 20
Relevant links: (please try to use some of the sources given below – particularly the ones down the bottom)
http://web-books.com/eLibrary/NC/B0/B62/084MB62.html
http://2012books.lardbucket.org/books/macroeconomics-principles-v1.0/s20-a-brief-history-of-macroeconom.html
http://www.jstor.org/stable/2077848?seq=3#page_scan_tab_contents
http://guggenheimpartners.com/perspectives/media/the-keynesian-depression
http://macro.econproph.net/part-ii/unit-10/ – Keynesian method to explain Great Depression / fiscal policy
http://www.skidelskyr.com/site/article/interpreting-the-great-depression-hayek-versus-keynes/ – Hayek vs Keynes interpretation + policy debate (also relates to 2007-8 recession)
http://www.nber.org/papers/w10255 – friedman-schwartz hypothesis
http://www.imf.org/external/pubs/ft/fandd/2014/09/basics.htm Keynesian way/ changes in AD
http://www.economist.com/blogs/freeexchange/2013/11/economic-history-0 – what we learnt + policy makers in regard to Great Depression
Galbraith, J. K., (1954). The Great Crash, 1929. New York: Time Incorporated.
Kindleberger, C. P., (1973). The World in Depression, 1929-39. Berkeley: University of California Press.
Eichengreen, B., (1992). Golden Fetters: The Gold Standard and the Great Depression, 1919-1939. Oxford: Oxford University Press.
Eichengreen, B., and Temin, P., (1997). “The Gold Standard and the Great Depression”. NBER Working Paper 6060. – retrieved from: http://isites.harvard.edu/fs/docs/icb.topic467999.files/October%2022%20and%2027%20-%20Trade%20Money%20and%20Finance/Eichengreen.pdf