Tariffs and the Great Depression revisited

Mario Crucini (mcrucini@purdue.edu) and James Kahn (jkahn1@yu.edu)

No 172, Staff Reports from Federal Reserve Bank of New York

Abstract: Drawing on recent business cycle research on the Great Depression, we return to an argument we advanced in a 1996 article in the Journal of Monetary conomics - the argument that features of the Hawley-Smoot tariffs could have done more to decrease economic activity than is customarily believed, though not enough to account for the severe decline of the early 1930s. Here we reformulate our argument in a business cycle accounting framework that apportions fluctuations between three types of "wedges": (productive) inefficiency, the consumption-leisure margin, and intertemporal inefficiency. Tariff increases in our model correspond primarily to productive inefficiency in a prototype one-sector model. Moreover, the wedge implied by tariffs during the Depression correlates well with the overall measure of productive inefficiency. Our model fails to produce a labor wedge of any onsequence-persuasive evidence that factors other than tariffs also contributed significantly to the severity of the Depression.

Keywords: Depressions; Tariff (search for similar items in EconPapers)
Date: 2003
New Economics Papers: this item is included in nep-dge
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr172.html (text/html)
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr172.pdf (application/pdf)

Related works:
Working Paper: Tariffs and the Great Depression Revisited (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fednsr:172

Ordering information: This working paper can be ordered from
pipubs@ny.frb.org

Access Statistics for this paper

More papers in Staff Reports from Federal Reserve Bank of New York Contact information at EDIRC.
Bibliographic data for series maintained by Gabriella Bucciarelli (gabriella.bucciarelli@ny.frb.org).