Publication: The Global Financial Crisis : Comparisons with the Great Depression and Scenarios for Recovery
Date
2009-08
ISSN
Published
2009-08
Author(s)
Brahmbhatt, Milan
Da Silva, Luiz Pereira
Abstract
A recent paper has highlighted some
close correspondences between economic performance during
the present world recession and that during the early months
of the great depression that began in late 1929. World
industrial production from April 2008 to April 2009 fell as
rapidly as during the first year of the great depression,
while stock market prices and world trade volumes have
fallen more rapidly than in the comparable period. These
comparisons lead Eichengreen and O'Rourke to draw the
alarming conclusion that 'it's a depression
alright.' They note, however, that fiscal and monetary
policies are likely to be much more supportive of economic
activity in the next 1-2 years than they were during the
first few years of the great depression. The first part of
this note outlines some other important structural
differences between the world economy today and in the 1930s
that are likely to affect how the present recession plays
out relative to the great depression. The second part of the
note discusses possible recovery paths out of the current crisis.
Citation
“Brahmbhatt, Milan; Da Silva, Luiz Pereira. 2009. The Global Financial Crisis : Comparisons with the Great Depression and Scenarios for Recovery. PREM Notes; No. 141. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/c0d94347-6155-5890-af8c-11ad830c94ac License: CC BY 3.0 IGO.”