Few periods in history compare to the Great Depression. Stock market crashes, bread lines, bank runs, and wild currency speculation were worldwide phenomena--all occurring with war looming in the background. This period has provided economists with a marvelous laboratory for studying the links between economic policies and institutions and economic performance. Here, Ben Bernanke has gathered together his essays on why the Great Depression was so devastating.

This broad view shows us that while the Great Depression was an unparalleled disaster, some economies pulled up faster than others, and some made an opportunity out of it. By comparing and contrasting the economic strategies and statistics of the world's nations as they struggled to survive economically, the fundamental lessons of macroeconomics stand out in bold relief against a background of immense human suffering. The essays in this volume present a uniquely coherent view of the economic causes and worldwide propagation of the depression.

This influential body of work is a significant contribution to our understanding the depth and persistence of the Great Depression.... This book will become a standard reference in the field of business cycle research.

Bernanke's work has had a powerful impact on the economics profession, alerting macroeconomists to the advantages of historical analysis, and a number of important figures (James Hamilton, Steve Cecchetti, for example), inspired by his work, have followed him into the field. The nine essays form a remarkably coherent whole.

Collecting these essays together will provide a single source for students to find Bernanke's substantial contributions.... His papers demonstrate conclusively that the international view of the great depression has impressive explanatory power.

Bernanke is the master of applied microeconomics. Not only is he technically proficient but his ability to place his results in a larger macroeconomic context is unparalleled.

When Ben Bernanke arrived at the Federal Reserve in February 2006 as the new chairman of the central bank, he had a copy of his 2001 book, , tucked under his arm. Not literally, of course. He was hoping to convince his colleagues on the Federal Open Market Committee of the value of an explicit inflation target. Little did he know that less than two years later he'd be shelving and turning to , another of his books, for guidance. In his book of essays, Bernanke calls the Great Depression the 'Holy Grail of macroeconomics.' He writes that 'the experience of the 1930s continues to influence macroeconomists' beliefs, policy recommendations, and research agendas.'

The essays in this volume present a uniquely coherent view of the economic causes and worldwide propagation of the depression.

Preface vii

PART ONE: OVERVIEW 3

1. The Macroeconomics of the Great Depression: A Comparative Approach 5

PART TWO: MONEY AND FINANCIAL MARKETS 39

2. Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression 41

3. The Gold Standard, Deflation, and Financial Crisis in the Great Depression: An International Comparison - With Harold James 70

4. Deflation and Monetary Contraction in the Great Depressim An Analysis by Simple Ratios - With Ilian Mihov 108

PART THREE: LABOR MARKETS 161

5. The Cyclical Behavior of Industrial Labor Markets: A Comparison of the Prewar and Postwar Eras - With James L. Powell 163

6. Employment, Hours, and Earnings in the Depression: An Analysis of Eight Manufacturing Industries 206

7. Unemployment, Inflation, and Wages in the American Depression: Are There Lessons for Europe? - With Martin Parkinson 247

8. Procyclical Labor Productivity and Competing Theories of the Business Cycle: Some Evidence from Interwar U.S. Manufacturing Industries - With Martin Parkinson 255

9. Nominal Wage Stickiness and Aggregate Supply in the Great Depression - With Kevin Carey 276

Index 303