A Multi-Sectoral Approach To The U.S. Great Depression

The authors document sectoral differences in changes in output, hours worked, prices, and nominal wages in the United States during the Great Depression. They explore whether contractionary monetary shocks combined with different degrees of nominal wage frictions across sectors are consistent with both sectoral as well as aggregate facts. To do so, they construct a two-sector model where goods from each sector are used as intermediates to produce the sectoral goods that in turn produce final output.