Consumption and Investment Booms in the 1920s and Their Collapse in 1930

Steven Gjerstad, Vernon L. Smith

Chapter in NBER book Housing and Mortgage Markets in Historical Perspective (2014), Eugene N. White, Kenneth Snowden, and Price Fishback, editors (p. 81 - 114)
Conference held September 23-24, 2011
Published in July 2014 by University of Chicago Press
© 2014 by the National Bureau of Economic Research

Similarities between the financial crisis in September 2008 and the collapse of the financial system during the depression have been widely noted. Yet the comparability of the origins and transmission of the crises have been neglected. The recent downturn, which originated with a pronounced housing boom and collapse, led to severe household balance sheet problems that were transmitted to lenders and mortgage security investors. Damage to household balance sheets weakened household demand - especially for housing and durable goods - which adversely affected employment, production, and non-residential fixed investment. This pattern, however, is not recognized in the dominant view as a possible cause of the depression. Contrary to prevailing views of the origins of the Great Depression, this paper argues that changes in levels of mortgage finance, residential construction, and the broader economy preceding and during the initial phases of the Great Depression shared many features with the recent Great Recession.

download in pdf format
   (312 K)

email paper

This paper is available as PDF (312 K) or via email.

This paper was revised on February 4, 2016

Machine-readable bibliographic record - MARC, RIS, BibTeX

Users who downloaded this chapter also downloaded these:
Li and White w15472 Mortgage Default, Foreclosure, and Bankruptcy
Field The Interwar Housing Cycle in the Light of 2001-2012: A Comparative Historical Perspective
Wickens Part Two: (II) Value and Rent of Nonfarm Residential Real Estate, 1930 and 1934
Klaman The Postwar Pattern of Mortgage Interest Rates
White and Rappoport w4627 The New York Stock Market in the 1920s and 1930s: Did Stock Prices Move Together Too Much?
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us