Speech: It Could Have Happened Here: The Policy Response That Helped Prevent a Second Great Depression

Attached is an expanded prepared version of a speech I gave at the Macroeconomic Advisers’ conference this morning. It assesses the policy response to the Great Recession in light of two counterfactuals: the Great Depression and the recent European experience.  The conclusion: “The achievement of avoiding a second depression is not one to be minimized. The similarities between macroeconomic variables during the onset was in many respects worse than in 1929 and 1930, but the policy response and the resulting outcomes could not have been more different. As difficult as it was losing hundreds of thousands of jobs per month, the 20 percent-plus unemployment rates of the 1930s should not be forgotten. As United States—and global— economic policy shifts its focus from crisis response to continued structural reform, it will be important to learn from what has worked and what has not as we continue to encourage more, shared growth in the twenty-first century.”