The Household Balance Sheet and the Great Depression

  title={The Household Balance Sheet and the Great Depression},
  author={Frederic S. Mishkin},
  journal={The Journal of Economic History},
  pages={918 - 937}
This paper focuses on changes in household balance sheets during the Great Depression as transmission mechanisms which were important in the decline of aggregate demand. Theories of consumer expenditure postulate a link between balance-sheet movements and aggregate demand, and applications of these theories indicate that balance-sheet effects can help explain the severity of this economic contraction. In analyzing the business cycle movements of this period, this paper's approach is Keynesian… 

Inside Money and the Great Depression

This paper considers the quantitative importance of inside money holdings in accounting for the Great Depression. Using a standard, business-cycle model with nominal-wage rigidity and the observed

Household Balance Sheets, Aggregate Demand and Unemployment (The Quaid-i-Azam Lecture)

U.S. households accumulated debt at an unprecedented pace between 2001 and 2007. In the aftermath of the housing downturn, deleveraging by highly indebted households is the most important factor

Household Debt and Economic Recovery Evidence from the U.S. Great Depression

The Great Recession has focused renewed attention on the role of household leverage in the business cycle. Household debt overhang and the ensuing process of deleveraging are often cited as factors

Income Distribution and the Great Depression

There is a growing literature comparing the current financial crisis or Great Recession to the worst economic crisis of capitalism, the Great Depression. However, the role of rising income

Non-Monetary Effects of the Financial Crisis in the Propagation of the Great Depression

This paper examines the effects of the financial crisis of the 1930s onthe path of aggregate output during that period. Our approach is complementary to that of Friedman and Schwartz, who emphasized

Financial Factors in the Great Depression

Macroeconomists have long argued that financial markets were important sources and propagators of decline during the Great Depression. Turning points during the Depression often coincided with or

Macroeconomic Implications of Financial Imperfections: A Survey

This paper surveys the theoretical and empirical literature on the macroeconomic implications of financial imperfections. It focuses on two major channels through which financial imperfections can

Where are households in the deleveraging cycle

The ratio of household debt to disposable personal income fell rapidly during the recession of 2007-09 as consumers defaulted on loans, paid down debt, and took out fewer loans. According to some



Household Demand for Assets: A Model of Short-Run Adjustments

M OST recent studies of the demand for assets (real or financial) restrict themselves to the examination of the market for a single asset or small group of similar assets. This approach contrasts

Illiquidity, the Demand for Residential Housing, and Monetary Policy

IN ANALYZING THE EFFECTS of monetary policy on the demand for tangible consumer assets, such as consumer durables and residential housing, primary attention has been focused on interest rate and

Illiquidity, Consumer Durable Expenditure, and Monetary Policy

In the literature on consumer durable expenditure, monetary policy has a major impact either through interest rate or liquid asset (real balance) effects. The theoretical justification for the

The Great Depression: A Structural Analysis

DURING THE GREAT DEPRESSION, gross national product in real terms declined almost 30 percent, and money GNP fell over 45 percent. Private investment sank below the level needed for replacement. The

A Monetary History of the United States

Writing in the June  issue of the Economic Journal, Harry G. Johnson begins with a sentence seemingly calibrated to the scale of the book he set himself to review: “The long-awaited monetary

The Debt-Deflation Theory of Great Depressions

IN Booms and Depressions, I have developed, theoretically and statistically, what may be called a debt-deflation theory of great depressions. In the preface, I stated that the results "seem largely

A Reappraisal of Some Factors Associated with Fluctuations in the United States in the Interwar Period

enriched by these efforts, but many of the hypotheses concerning the perverse economic behavior of this period have never been brought together in any formal way, nor have they been subjected to an


THROUGHOUT the discussion of efficient capital markets, little attention has been given to the apparent contradiction between the quantity theory of money and the efficient markets hypothesis. Yet

The World in Depression 1929-1939

List of Text Figures List of Tables Foreword Preface 1. Introduction 2. Recovery from the First World War 3. The Boom 4. The Agricultural Depression 5. The 1929 Stock-Market Crash 6. The Slide to the

Monetary policy

a. Growth rates calculated on a fourth-quarter over fourth-quarter basis. 1999 growth rates for M2 and M3 calculated on an estimated September over 1998:IVQ basis. 1999 growth rate for the