SSE/EFI Working Paper Series in Economics and Finance
No 431:
Ohlin on the Great Depression. The popular message in the daily press
Benny Carlson ()
and Lars Jonung ()
Abstract: This paper traces the development of Bertil Ohlin's views
on issues such as the causes of the depression of the 1930's, policies
against the depression, the use of fiscal and monetary policies, and
tariffs and public works to stabilize the business cycle. We examine about
80 of his articles on the depression of the 1930’s, published in
Stockholms-Tidningen, a Stockholm daily, between 1926 and 1935. This is a
small sample of Ohlin's total output of more than 2 300 contributions to
the daily press – a number that makes him the most prolific economic
journalist of all Swedish professors of economics in the 20th century
Our basic result is that Ohlin was an eager but cautious commentator on
current affairs. Initially, he was quite optimistic, underestimating the
depth of the depression. Later, as the depression worsened, he proposed
bolder measures such as increased public works and public investments as
well as an expansionary monetary policy to fight unemployment. By 1932,
Ohlin had adopted a multiplier approach. He was strongly opposed to cuts in
nominal wages and public expenditures during the depression. Summarizing
his views on the depression in 1934, Ohlin concluded that it was not the
result of any inherent weakness of capitalism.
Turning to the perennial
debate on the originality of the Stockholm School: Do Ohlin´s daily
articles show him as a pioneer or as an orthodox in macroeconomic thinking
in the 1930's? We conclude that support for either interpretation can be
heralded. However, Ohlin appears more radical in his academic writings than
in his newspaper articles – a view supported by Ohlin himself in his
memoirs.
Keywords: Bertil Ohlin; the great depression; the Stockholm School; fiscal and monetary policy; keynesian macroeconomics; (follow links to similar papers)
JEL-Codes: B20; B31; E24; E60; N14; (follow links to similar papers)
44 pages, February 9, 2001
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