NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Global 1970s and the Echo of the Great Depression

Alan M. Taylor

NBER Working Paper No. 15475
Issued in November 2009
NBER Program(s):   DAE   ITI   POL

The Great Depression ushered in a long era of deglobalization that lasted for many decades. An old conventional wisdom (e.g. Polanyi) argues that the common aspect of this shock across all countries, a deep depression, can explain the large and persistent global shift away from orthodox liberal economic policies--including, for example, the collapse of free trade. Yet there is substantial unexplored variation, since not all countries experienced the same depth of shock in the 1930s. Hence, if the "policy path dependence" argument is correct, we should be able to detect it using this variation. Those countries with deeper slumps ought to have seen policy shifts that were larger and more persistent. A fuller economic history of the reglobalization of the postwar period should confront this question, and we present some preliminary evidence for the path dependence hypothesis.

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Document Object Identifier (DOI): 10.3386/w15475

Published: Taylor, A. M. “The Global 1970s and the Echo of the Great Depression.” In The Shock of the Global: The 1970s in Perspective, edited by Niall Ferguson et al. Cambridge: Harvard University Press, 2010.

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