The Corner

Good Question

From an economist:

Dear Jonah,

The problem with “is WWII responsible for ending The Great Depression?”

is the question is posed wrong. The question implies there that is SOMETHING responsible and we need to figure out whether it was WWII or something else. But one does not need to find a cause of recessions or depressions ending. They almost always do that themselves and usually quite quickly. The puzzle is not why the depression ended but why it didn’t end sooner. Thus the correct question is “what is responsible for the depression not ending in 1933?” The best answer is The New Deal, especially the cartelization of industry it encouraged. The best paper is by Hal Cole and Lee Ohanian “New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis”, which is forthcoming in the Journal of Political Economy. It can be downloaded at

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