By Alexander J. Field Ph.D.
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Extra info for A Great Leap Forward: 1930s Depression and U.S. Economic Growth
The models and methods employed differ from those being developed at what John Cochrane (2009) and others would consider the frontiers of macroeconomic research. The framework utilized is what continues to be taught in intermediate macroeconomics courses: a blend of Keynesian aggregate demand analysis with an expectations-augmented Philips curve and explicit treatment of aggregate supply. This framework has the great merit of being useful for research in economic history, of helping us understand the current economic environment, and of offering assistance to policymakers when the economy is below potential.
The IT boom, and the technologies with which it was associated, have changed our lives. But from a historical perspective, advance was narrowly concentrated in the manufacturing sectors producing products such as computers, cell phones, and routers, as well as, at least initially, in a few sectors such as retailing and securities trading that used IT intensively. Compared to the Great Depression, the locus of revolutionary change was not as broad, and its overall impact on the growth of economic capacity has been more modest.
Both the declining influence of progress within manufacturing (compared especially with the 1920s) and the significance of the continued transition within transportation and distribution reflected trends whose origins are to be found in the interwar years. The causes of the slowdown in productivity growth during the “dark ages” (1973 through 1989 or 1995) remain an enigma. The retardation was broad-based; the continued slippage in the manufacturing TFP growth rate can account for only about a sixth of the TFP slowdown in the private nonfarm economy.
A Great Leap Forward: 1930s Depression and U.S. Economic Growth by Alexander J. Field Ph.D.