Thursday, May 3, 2007

What I'm Reading

I just finished reading Essays on the Great Depression by Fed Chairman Ben Bernanke. It is a collection of papers, some going back to the 1980s and predating his time with the Federal Reserve. I admit I've been meaning to read this since he was nominated for the Chairman's position at the Board. It was at that time that I found out that he had written on the Depression, a topic that is one of the more fascinating aspects of the 20th century for me.

I will start out by saying this is not light summer beach reading. Having said that, I can say I'm glad I read the book. While much of the mathematics was over my head, the data was clear. Dr. Bernanke does a very good job of explaining what the data shows and how the mathematical models were constructed. I clearly understood what the conclusions were and why. This speaks to his abilities as a teacher as well as a researcher.

The essays are divided into three sections: an overview, money and financial markets, and labor markets. I would be remiss if I didn't say I understood one and two more clearly than part three. But this is largely due to my own interests. Nevertheless, there were ideas in the third section that I had not adequately considered before - like the concept of labor hoarding; and ideas that I had looked at, but not thought through sufficiently - like real vs. nominal wages.
For teachers who have an interest in the Great Depression, and who are not afraid of working a little to gain some new insights, I can strongly recommend this book. And that goes for teachers of economics and American History. One comes away with a greater appreciation of the event that shaped so much of the 20th century.

And I must admit I now understand more clearly the remarks made by then Governor Bernanke on the occasion of Milton Friedman's 90th birthday when he said, "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna [Schwartz]: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."

I would welcome your comments, particularly but not exclusively if you've also read the book.

Posted by TSchilling at May 3, 2007 10:55 AM

If the math was too hard for you, what are we, poor mortals, to do? :-( My understanding is that Bernanke's name is linked with the G.D. by his successful resurrection of the debt deflation mechanism in accounting for the magnitude and persistence of the depression. I think he has at last 2-3 good papers on this. Is this (debt deflation) still something which figures prominently in his treatment?

Posted by: Gabriel M. at May 3, 2007 3:06 PM

Please understand, my economics training is in History of Economics not a more traditional economics degree. (If you're wondering what that means: I actually read The Wealth of Nations.) Consequently, mathematical models cause me to hesitate on several levels.

Posted by: Tim at May 4, 2007 8:07 AM

I've found that the Great Depression sparks great discussion in the classroom. In my intro to macro classes, I usually assign a writing project asking students to answer the question, "The Great Depression, could it happen again?" Student's that don't often participate in classroom discussion become very passionate about defending their views during discussion about the writing project. (BTW, this assignment is borrowed from the Minneapolis Fed essay contest see

Posted by: JenniferR at May 10, 2007 10:30 AM

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