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The Great Depression in Italy: Trade Restrictions and Real Wage Rigidities

Author

Listed:
  • Fabrizio Perri

    (New York University)

  • Vincenzo Quadrini

    (New York University)

Abstract

In Italy, as in many other countries, the years immediately after 1929 were characterized by a major slowdown in economic activity. We argue that the depth and duration of the crisis cannot be explained solely by productivity shocks. We present a model in which trade restrictions together with wage rigidities produce a significant slowdown in economic activity. The model is also consistent with evidence from sectoral disaggregated data. Our model predicts that trade restrictions can account for about one-half of the slowdown observed in the data while real wage rigidities can account for one-fourth of it. (Copyright: Elsevier)

Suggested Citation

  • Fabrizio Perri & Vincenzo Quadrini, 2002. "The Great Depression in Italy: Trade Restrictions and Real Wage Rigidities," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(1), pages 128-151, January.
    • Handle: RePEc:red:issued:v:5:y:2002:i:1:p:128-151
    DOI: 10.1006/redy.2001.0144
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    References listed on IDEAS

    as
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    5. David K. Backus & Patrick J. Kehoe & Finn E. Kydland, 1992. "Dynamics of the trade balance and the terms of trade: the J-curve revisited," Discussion Paper / Institute for Empirical Macroeconomics 65, Federal Reserve Bank of Minneapolis.
    6. Feinstein, Charles H. & Temin, Peter & Toniolo, Gianni, 1997. "The European Economy Between the Wars," OUP Catalogue, Oxford University Press, number 9780198774815.
    7. Backus, David K & Kehoe, Patrick J & Kydland, Finn E, 1994. "Dynamics of the Trade Balance and the Terms of Trade: The J-Curve?," American Economic Review, American Economic Association, vol. 84(1), pages 84-103, March.
    8. Harold L. Cole & Lee E. Ohanian, 2001. "Re-Examining the Contributions of Money and Banking Shocks to the US Great Depression," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 183-260, National Bureau of Economic Research, Inc.
    9. Harold L. Cole & Lee E. Ohanian, 1999. "The Great Depression in the United States from a neoclassical perspective," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 23(Win), pages 2-24.
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    More about this item

    Keywords

    Great Depression; Italy; trade;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-

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