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The Impact of Cartelization, Money, and Productivity Shocks on the International Great Depression

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  • Harold L. Cole
  • Lee E. Ohanian
Abstract
This study exploits panel data from 18 countries to assess the contributions of cartelization policies, monetary shocks, and productivity shocks on macroeconomic activity during the Great Depression. To construct a parsimonious and common model framework, we use the fact that many cartel policies are observationally equivalent to a country-specific labor tax wedge. We estimate a monetary DSGE model with cartel wedges along with productivity and monetary shocks. Our main finding is that cartel policy shocks account for the bulk of the Depression in the countries that adopted significant cartel policies, including the large depressions in the U.S., Germany, Italy, and Australia, and that the estimated cartel policy shocks plausibly coincide with the actual evolution of policies in these countries. In contrast, cartel policy shocks in the countries that did not significantly change policies were small and account for little of their Depressions.

Suggested Citation

  • Harold L. Cole & Lee E. Ohanian, 2013. "The Impact of Cartelization, Money, and Productivity Shocks on the International Great Depression," NBER Working Papers 18823, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:18823
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    1. The Impact of Cartelization, Money, and Productivity Shocks on the International Great Depression
      by Christian Zimmermann in NEP-DGE blog on 2013-03-18 23:53:57

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    JEL classification:

    • F1 - International Economics - - Trade
    • N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-

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