A monthly econometric model of the transmission of the great depression between the principal industrial economies

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review

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  • James Foreman-Peck
  • Andrew Hughes Hallett
  • Yue Ma


Original languageEnglish
Pages (from-to)515-544
Journal / PublicationEconomic Modelling
Issue number4
Publication statusPublished - Dec 2000
Externally publishedYes


This article describes and estimates, with monthly data, a model of the economic interactions between the United States, the United Kingdom, France and Germany over the years 1927-1936. Despite the radically different economic environment, the model shows broadly similar qualitative and dynamic responses to policy instruments and other changes to those of multi-country models estimated on more recent data. The model is simulated to assess the causes of the Great Depression and the particular contribution of European and American policies to the slump. Optimum strategic policy equilibria are then computed. They point to the mismanagement of the US economy as the principal cause of the depression, although French and German policies were also harmful. British policymakers performed rather well, but their economy suffered because of the other countries' policy errors. © 2000 Elsevier Science B.V. All rights reserved.

Research Area(s)

  • Great depression, Multicountry model, Optimal strategic policies