 The French Great Depression: A business cycle accounting analysisSlim Bridji Explorations in Economic History, 2013, vol. 50, issue 3, 427-445 Abstract: Using the business cycle accounting framework [Chari V., P. Kehoe and E. McGrattan 2007. Business cycle accounting. Econometrica 75, 781–836.], this paper sheds new light on the French Great Depression. Frictions that reduce the efficiency with which factor inputs are used (efficiency wedge) were the primary factor in the economic downturn. The decline in consumption can be attributed to distortions in the Euler equation (investment wedge). In addition, frictions creating a gap between the marginal rate of substitution and the marginal product of labor (labor wedge) contributed to the slowdown of the economy after 1936. This drop in the efficiency wedge might have resulted from financial frictions, whereas the investment wedge might have been caused by financial frictions due to agency costs. Institutional changes in the labor market could serve as a potential explanation for the decline of the labor wedge after 1936. Keywords: Business cycle accounting; French economy; Great Depression (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:exehis:v:50:y:2013:i:3:p:427-445 DOI: 10.1016/j.eeh.2012.10.002 Access Statistics for this article Explorations in Economic History is currently edited by R.H. Steckel More articles in Explorations in Economic History from Elsevier |
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