The Great Depression in the United States from a Neoclassical Perspective

by Harold Cole and Lee Ohanian

Cole and Ohanian focus on some of these anti-market FDR policies. I think they’re right that these are mistakes, as are some of the tax increases. There was a tax increase under Hoover and then some under Roosevelt, trying to balance the budget, which was clearly a mistake in the context of the very high unemployment rate and the poor economy. But as to how much that mattered is much less clear. N.B. See also Harold Cole and Lee Ohanian, New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis.