NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Great Crash and the Onset of the Great Depression

Christina D. Romer

NBER Working Paper No. 2639
Issued in June 1988
NBER Program(s):   EFG

This paper argues that the collapse of stock prices in October 1929 generated temporary uncertainty about future income which caused consumers to forego purchases of durable and semidurable goods in late 1929 and much of 1930. Evidence that the stock market crash generated uncertainty is provided by the decline in confidence expressed by contemporary forecasters. Evidence that this uncertainty affected consumer behavior is provided by the fact that spending on consumer durables and semidurables declined immediately following the Great Crash and by the fact that there is a negative historical relationship between stock market variability and the production of consumer durables in the prewar era.

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Document Object Identifier (DOI): 10.3386/w2639

Published: Quarterly Journal of Economics, Vol. 105, pp. 597-624, August 1990. citation courtesy of

 
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