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The New (Raw) Deal November 24, 2008

Posted by A Texan In Grad School in Economic Theories.
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UCLA economists, Harold L. Cole and Lee E. Ohanian’s new research shows that the New Deal prolonged the Great Depression by 7 years.  My favorite quote in the press release:

“High wages and high prices in an economic slump run contrary to everything we know about market forces in economic downturns,” Ohanian said. “As we’ve seen in the past several years, salaries and prices fall when unemployment is high. By artificially inflating both, the New Deal policies short-circuited the market’s self-correcting forces.”

The working paper is here.

HT: Carpe Diem

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