Discussion Paper Details
Please find the details for DP3267 in an easy to copy and paste format below:
Title: Did Sunspot Forces Cause the Great Depression?
Author(s): Sharon G Harrison and Mark Weder
Publication Date: March 2002
Keyword(s): dynamic general equilibrium, great depression and sunspots
Programme Area(s): International Macroeconomics
Abstract: We apply a dynamic general equilibrium model to the period of the Great Depression. In particular, we examine a modification of the real business cycle model in which the possibility of indeterminacy of equilibria arises. In other words, agents' self-fulfilling expectations can serve as a primary impulse behind fluctuations. We find that the model, driven only by these measured sunspot shocks, can explain well the entire Depression era; that is, the decline from 1929-32, the subsequent slow recovery and the recession that occurred in 1937-38.
For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=3267
Harrison, S and Weder, M. 2002. 'Did Sunspot Forces Cause the Great Depression?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=3267