Romer on the Great Depression
My Money and Banking class this week looked at the Great Depression. You can read a recent interview given by Christina Romer, former chair of Obama’s Council of Economic Advisers, where she reviews five books/articles on the Great Depression – click here. This interview gives a good overview regarding the causes and cures of the Great Depression.
One thing which emerges from Romer’s interview is that many economists have been drawing close parallels between the Great Depression and the ongoing Great Recession. These parallels have been used to justify the extreme policy interventions used by central banks and governments. As much as I like to see governments and economists drawing lessons from economic history, one has to wonder whether we have been hasty in drawing comparisons between the two episodes. Have our political leaders simply used the Great Depression (and our fears of a repeat) as a justification to bail out large financial institutions? Or has it been a stroke of genius / serendipity to have experts on the Great Depression, such as Bernanke and Romer, at the centre of policy-making?