Essays on the Great Depression

“Probably his most important contribution in terms of macroeconomics and financial economics…It’s focusing on the Great Depression as a credit implosion, not so much the money supply, which Friedman and Schwartz had emphasized, but a somewhat related phenomenon, which is credit availability. That had been imploding from 1929 through to the trough, early in 1933. So it’s really focusing on the credit aspects and trying to measure that, particularly by looking at patterns in interest rates.” Read more...

The Lessons of the Great Depression

Robert Barro, Economist

“Bernanke’s focus turned out to be incredibly important. It started a whole literature on how credit matters, above and beyond what’s reflected in interest rates. He changed our view of how monetary policy affects the economy. That idea had a huge impact on the Federal Reserve’s behaviour in the most recent crisis. In response to the financial crisis in the fall of 2008, the Fed not only followed the conventional central bank remedy – flood the system with liquidity and make sure there’s plenty of cash out there – but they also took extraordinary actions to keep credit flowing. “ Read more...

The best books on Learning from the Great Depression

Christina Romer, Economist