Lucrezia Reichlin, Domenico Giannone, Michele Lenza, Huw Pill, 23 November 2010

Did monetary policy errors cause the economic collapse of the early 1930s? What lessons have monetary policymakers and central banks taken from this episode? Discussion Paper 8125 sets out to address these questions, in the context of the financial crisis of 2008-09 and with application to the euro area.

Kevin O'Rourke, 27 November 2009

Today’s great trade collapse has brought world trade to a point that is still substantially below the corresponding period during the Great Depression. The collapse, however, seems to be turning around along with the economic recovery. This chapter draws two critical Great-Depression lessons for today. First, policy makers must ensure that the recovery continues; many of the worst political and economic-policy transformations only came after the Great Depression was into its second and third years. Second, recent research shows that severe exchange rate misalignments teamed with rising unemployment led to much of the 1930s protectionism. The issue of the renminbi peg to the dollar is one that needs to be confronted sooner rather than later, for everyone's sake.

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