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)
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.
Number of Pages in PDF File: 59
Date posted: July 15, 2004