From Great Depression To Great Credit Crisis: Similarities, Differences And Lessons
If, as it seems, the 2008 global recession is over and it has not been as severe and as prolonged as the great depression who or what should we thank? Has this happened because we have been just lucky this time or because now we make better and more aggressive use of counter-cyclical policies? Could have the great depression been avoided had we used these policies more aggressively at the time? These are the provoking and policy relevant questions raised in this paper. The answers (and key messages) in the paper can be summarized as following. Fiscal policy was not used during the great depression but that does not mean it was not effective.