Real business cycle models of the great depression
(2007)
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- Authors
- Supervisors
- De Vroey, Michel
- Abstract
- "To understand the Great Depression is the Holy Grail of macroeconomics". So far, for all the bravery of the knights, the quest has proved to be challenging, and the task is not yet fully attained. In the span of almost eighty years, several theories claimed to have clinched the matter. Inexorably, each time that claim proved to be wrong, or partial at least. Each time new theoretical developments, or new data successfully challenged the dominant story. What is more, each time the change in the perspective under which the economists looked at the Depression signalled a shoft in the dominant paradigm in macroeconomics. This thesis deals with a new stage of the quest. Few years after Eichengreen's synthesis between the Keynesian and monetarist explanations was believed to have provided the final word on the Depression history, Harold Cole and Lee Ohanian brought it all up for discussion. In daring to face the Great Depression by means of a full-fledged neoclassical model in the real business cycle (RBC) tradition, they broke what was perceived by many authors as a taboo: for the first time in the history of macroeconomics, an analytical neoclassical model entered the battlefield of the Great Depression, once considered a theme defying any equilibrium explanation. What is new about the RBC explanation of the Great Depression? Are we witnessing the setting of a new dominant paradigm in macroeconomics? How did the paradigm need to be emended in the endeavour to tackle the Depression issue? This thesis elucidates the fundamentals of RBC modelling on the Great Depression; investigates its origin back in the history of the new classical revolution; provides some critical thought on its whereabouts; presents the analysis of the Belgian case through the lens of RBC theory.
- Affiliations
Citations
Pensieroso, L. (2007). Real business cycle models of the great depression. https://hdl.handle.net/2078.5/187163