Publication detail

Money and Business Cycles: Lessons Not Taken from the Great Depression

Author(s): MPhil Pavel Ryska Ph.D.,
Type: Article in collection
Year: 2009
Number: 0
ISSN / ISBN: 978-80-248-2150-4
Published in: VŠB TÚ
Publishing place: Ostrava, Česká republika
Keywords: Business cycle, monetary policy, monetarism, Austrian school, Great Depression.
JEL codes:
Suggested Citation:
Abstract: The present paper deals with monetary theories of the business cycle, illustrated on the example of the Great Depression. I show that the current macroeconomic consensus, drawing heavily from monetarism, largely overlooks the effect of monetary expansions on the interest rate, which is an essential intertemporal price in the economy. Next, I argue that monetary expansions are not the cure for, but the cause of the business cycle, working through distortion of the interest rate. The 1920s, while generally known for price stability, are then shown to be a period of massive monetary inflation that laid the foundations for the subsequent Great Depression.


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