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Essays on the Great Depression Paperback – January 25, 2004
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"Mr. Bernanke certainly knows the importance of well-functioning markets. In Essays on the Great Depression he wrote persuasively that runs on the banks and extensive defaults on loans reduced the efficiency of the financial sector, prevented it from doing its normal job in allocating resources, and contributed to the Depression severity. The Depression-era problems he studied are mirrored by similar issues today, and they need urgent attention."---Robert J. Shiller, New York Times
"[H]aving devoted much of his career to studying the causes of the Great Depression, Bernanke was the academic expert on how to prevent financial crises from spinning out of control and threatening the general economy. One line from his Essays on the Great Depression sounds especially prescient today: 'To the extent that bank panics interfere with normal flows of credit, they may affect the performance of the real economy.'"---Roger Lowenstein, New York Times Magazine
"Bernanke is the master of applied microeconomics. Not only is he technically proficient but his ability to place his results in a larger macroeconomic context is unparalleled."---Mark Toma, Financial History Review
"When Ben Bernanke arrived at the Federal Reserve in February 2006 as the new chairman of the central bank, he had a copy of his 2001 book, Inflation Targeting: Lessons from the International Experience, tucked under his arm. Not literally, of course. He was hoping to convince his colleagues on the Federal Open Market Committee of the value of an explicit inflation target. Little did he know that less than two years later he'd be shelving Inflation Targeting and turning to Essays on the Great Depression, another of his books, for guidance. In his book of essays, Bernanke calls the Great Depression the 'Holy Grail of macroeconomics.' He writes that 'the experience of the 1930s continues to influence macroeconomists' beliefs, policy recommendations, and research agendas.'"---Caroline Baum, Bloomberg.com
"Fortunately, before he became entangled in these restrictions [Bernanke] did edit and help write a book, Essays on the Great Depression. . . . Mr. Bernanke's motive was that understanding the depression would provide important clues to what can go wrong with capitalist market systems."---Samuel Brittan, Financial Times
"With some observers saying that the ongoing financial crisis could be the worst since the Great Depression, the greatest living expert on that period is getting the chance to apply its economic lessons. . . . In Essays on the Great Depression . . . [Bernanke] notes that understanding that period is the 'holy grail of macroeconomics.'"---Spencer Jakab, Dow Jones Newswires
- Item Weight : 15 ounces
- Paperback : 320 pages
- ISBN-10 : 0691118205
- ISBN-13 : 978-0691118208
- Product Dimensions : 6.14 x 0.72 x 9.21 inches
- Publisher : Princeton University Press (January 25, 2004)
- Language: : English
- Best Sellers Rank: #870,263 in Books (See Top 100 in Books)
- Customer Reviews:
Top reviews from the United States
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Bernanke's views regarding the Great Depression largely avoid the pre-80's debate over the 'money' hypothesis and 'spending' hypothesis. These views, argued by Friedman and Temin, used a quantitative analysis of the domestic markets and government policy. Instead, Bernanke assumes, and strongly supports, the view of Barry Eichengreen and Jeffery Sachs (1986) that the Gold Standard was the cause of the Great Depression. A sharp drop in the supply of money created a sharp drop in aggregate demand. Other factors, like sticky wages and prices, contributed to the Great Depression but were not the main factors. It was not until countries got off the Gold Standard that they were able to grow.
It is likely that the Federal Reserve or the Bank of England could have prevented a widespread depression between 1929-1930. However, after that period it remains doubtful whether either country could quell the Depression while maintaining the Gold Standard. It is important to note that the Great Depression was not caused by the USA alone (as commonly held before the 1980's). Bernanke is unable to explain what caused the Depression but can prove that it was not only the US (by inference the cause was international).
Due to the limited amount of statistics about the Great Depression Bernanke is forced to make MANY assumptions when building econometric models. At points his methodology becomes somewhat questionable (to his credit he often mentions this to the reader). Nevertheless, when Bernanke reaches his conclusions he is quite confident of the results (which is somewhat troubling...).
Overall: a great analysis of the Great Depression. In the academic circles, to my knowledge, Bernanke's conclusions remain the standard. (For some reason Macroeconomic textbooks seem to ignore both Beranke and Eichengreen's work -- I don't know why).
You should also note that this collection was compiled back in 2000, before Bernanke had begun his career in government. So, nothing he may have learned from serving at the Fed or at the Council of Economic Advisers is reflected in these essays. Still, if you are interested in the research that has informed some of Bernanke's actions at the Fed, this is the place to go.
Each essay makes a case for a particular perceived cause of the depression. The writer presents a perceived cause, eg. the gold standard ,in each essay and then offers reasons why he believes the cause was a real cause or no. The conclusion of each essay then states that the cause truly was a cause or no. The middle of each essay is an accumulation of mathematical and political substantiation to prove or refute the cause. The 'middles' of each essay are not particularly interesting and often are tedious, belonging more in a textbook than in a text for the public. Bernanke's vocabulary is loaded with technical phrases that adds to the tedium.
However in summary I enjoyed the work and learned a great deal from it.
It is not a text for the reader looking for something to read for fun.
Top reviews from other countries
However, this book is his PhD thesis on the Great Depression of 1929 - 1934. Hence it is written as such and is relatively theoretical. Personally, unless you have a university background in economics, I would skip this book.
If you are interested in economics, by all means do give it a go. The book is extremely interesting in as much as it attempts to explain the causes of the Great Depression. Most economists are taught, teach and write about equilibia. Bernanke has chosen to write about a disequilibrium, which is much more challenging and even more interesting.
It's very hard for me to rate this book but I have only given it three stars because of sentences like the following one. 'Absent implausibly large differences in marginal spending propensities among the groups, it was suggested, pure redistributions should have no significant macro-economic effects.'
It took me about an hour to get that and I still don't think it is a correct sentence. There is no virtue in obscurity, unless of course you are a banker, as we now all realise.