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12 - Fiscal Multipliers Are Larger Than Expected

from Part III - Lessons

Published online by Cambridge University Press:  05 August 2019

James Gerber
Affiliation:
San Diego State University
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Summary

As the United States descended into the Great Depression of the 1930s, economic advice was contradictory and confused. The business community, politicians, and academics called for a variety of different policies: Some wanted government to do nothing, believing that there was not much that government could do, that recessions had to work their way through the economic system, like a poison that has no antidote; others thought government should encourage firms to invest, that they should be allowed to form cartels to control prices and wages and output; and still others favored public works that would put the unemployed back to work. To a large degree, Roosevelt was more successful than Hoover because he kept trying one thing after another. He did not have a comprehensive economic model, or even much of any kind of model, but focused on humanitarian relief as something government could do even if it did not understand how to systematically counter the recession. At least government could aid those who lost their jobs, their homes, and their farms. Roosevelt did not end the Great Depression and we now know that many of his policies and those of his contemporaries were counterproductive and prolonged the recession.

Type
Chapter
Information
A Great Deal of Ruin
Financial Crises since 1929
, pp. 237 - 251
Publisher: Cambridge University Press
Print publication year: 2019

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