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The Great Deflation of 1929–33: it (almost) had to happen 1
Author(s) -
MAZUMDER SANDEEP,
WOOD JOHN H.
Publication year - 2013
Publication title -
the economic history review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.014
H-Index - 49
eISSN - 1468-0289
pISSN - 0013-0117
DOI - 10.1111/j.1468-0289.2011.00646.x
Subject(s) - deflation , economics , convertibility , keynesian economics , great depression , purchasing power , monetary economics , currency , convertible , value (mathematics) , relative price , monetary policy , political science , structural engineering , machine learning , computer science , engineering , law
There are many explanations of the fall in prices and production called the Great Depression of 1929–33, but this article argues that a sufficient explanation of the price fall—the Great Deflation—was the resumption of the gold convertibility of currencies at prewar parities. The value (general purchasing power) of a convertible currency must be the relative cost of producing gold and other goods, which did not change significantly between 1914 and the 1930s. Monetary and fiscal policies might have affected the timing but not the ends of the price paths that were determined by the decisions to resume.