The Great Depression and the Great Recession: A Comparative Analysis of their Analogies

Cristina Peicuti

MPRA Paper from University Library of Munich, Germany

Abstract: The decades preceding the Great Depression and the U.S. subprime mortgage crisis have close similarities. Both decades were characterized by rapid growth without major contractions, by an increase in liquidity, a lack of inflation, and a generalized decrease in risk premiums. Additional similarities included significant changes in the financing of real estate by commercial banks along with a consolidation of the banking sector and high hopes that the efficiency of monetary policy would prevent financial crises. These decades were also characterized by the consolidation of the powers of young central banks (the Federal Reserve System in the 1920s and the European Central Bank in the 2000s), by unsuccessful attempts to control market speculation, by their international dimensions, and by the eruption of crises after the failure of a major American financial institution that could have been avoided. Understanding these analogies help us better identify the causes of the subprime mortgage crisis and prevent history from repeating itself to the extent of such large-scale devastating consequences.

Keywords: financial crisis; Great Depression; credit; subprime mortgage crisis; liquidity; inflation; central bank; commercial bank (search for similar items in EconPapers)
JEL-codes: E51 F01 G15 G21 (search for similar items in EconPapers)
Date: 2014-06-10
New Economics Papers: this item is included in nep-his, nep-hpe and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published in The European Journal of Comparative Economics n. 1.Vol. 1(2014): pp. 55-78

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/57883/1/MPRA_paper_57883.pdf original version (application/pdf)

Related works:
Journal Article: The Great Depression and the Great Recession: A Comparative Analysis of their Analogies (2014)
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:pra:mprapa:57883

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().