Document Type

Book Chapter

Publication Date



Oxford University Press


The first part of this chapter provides an overview of what lay behind record productivity growth in the US economy between 1929 and 1941. The second part considers the role of rigidities and other negative supply conditions in worsening the downturn and slowing recovery. While arguing consistently that the overarching explanation of the Great Depression will and should continue to emphasise a collapse and slow revival in the growth of aggregate demand, the chapter spends relatively little time on what drives this. The emphasis of the chapter is on aggregate supply—both the broad array of positive shocks that propelled potential and, eventually, actual output forward, and the negative conditions which, in interaction with aggregate demand, may have increased the size of the output gap and prolonged its persistence. An appendix offers discussion and updated calculations of productivity growth rates for the critical period 1929–41.

Chapter of

The Great Depression of the 1930s: Lessons for Today


Nicholas Crafts
Peter Fearon


This material was originally published in The Great Depression of the 1930s: Lessons for Today edited by Nicholas Crafts & Peter Fearon, and has been reproduced by permission of Oxford University Press. For permission to reuse this material, please visit



To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.