The Great Accretion and the Great Depression

Harold Cole, Stefano Cravero and Jeremy Greenwood

No 35816, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The Second Industrial Revolution sparked a wave of new products and industrial processes, fueling an optimistic Roaring Twenties. But did excitement about technological progress contribute to an over accumulation of investment, despite a slowdown in new product development and satiated demand during the 1920s? And, was this over investment worsened by continuous process innovation? Could these factors have played a role in triggering the Great Depression? To explore these questions, a macroeconomic model that incorporates both process and product innovation is proposed. Proof-of-concept simulations are performed to assess whether these factors can help explain the Great Depression. The answer is yes.

JEL-codes: E13 E22 E24 E32 N12 O40 (search for similar items in EconPapers)
Date: 2026-09
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