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The Great Crash and the Onset of the Great Depression

Christina D. Romer

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER)

June 1988

NBER Working Paper No. w2639

This paper argues that the collapse of stock prices in October 1929 generated temporary uncertainty about future income which caused consumers to forego purchases of durable and semidurable goods in late 1929 and much of 1930. Evidence that the stock market crash generated uncertainty is provided by the decline in confidence expressed by contemporary forecasters. Evidence that this uncertainty affected consumer behavior is provided by the fact that spending on consumer durables and semidurables declined immediately following the Great Crash and by the fact that there is a negative historical relationship between stock market variability and the production of consumer durables in the prewar era.

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Date posted: July 15, 2004  

Suggested Citation

Romer, Christina D., The Great Crash and the Onset of the Great Depression (June 1988). NBER Working Paper No. w2639. Available at SSRN: http://ssrn.com/abstract=262094

Contact Information

Christina D. Romer (Contact Author)
University of California, Berkeley - Department of Economics ( email )
549 Evans Hall #3880
Berkeley, CA 94720-3880
United States
510-642-4317 (Phone)
510-642-6615 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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