Kevin Carey

The Education Trust
1250 H Street, NW, Suite 700
Washington, DC 20005
Tel: 202-293-1217

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: The Education Trust

NBER Working Papers and Publications

January 1996Nominal Wage Stickiness and Aggregate Supply in the Great Depression
with Ben S. Bernanke: w5439
Building on earlier work by Eichengreen and Sachs, we use data for 22 countries to study the role of wage stickiness in propagating the Great Depression. Recent research suggests that monetary shocks, transmitted internationally by the gold standard, were a major cause of the Depression. Accordingly, we use money supplies and other aggregate demand shifters as instruments to identify aggregate supply relationships. We find that nominal wages adjusted quite slowly to falling prices, and that the resulting increases in real wages depressed output. These findings leave open the question of why wages were so inertial in the face of extreme labor market conditions.

Published: Quarterly Journal of Economics, August 1996, vol.111, no.3, pp.853-883. citation courtesy of

National Bureau of Economic Research
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Cambridge, MA 02138

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