This paper examines the hypotheses that the length and the depth of the Great Depression were a result of sticky prices or sticky nominal wages using panel data for…
This paper examines the hypotheses that the length and the depth of the Great Depression were a result of sticky prices or sticky nominal wages using panel data for industrialized and semi-industrialized countries. The results show that price stickiness, particularly, and wage stickiness were key propagating factors during the first years of the Depression. It is found that prices adjusted slowly to wages, particularly in manufacturing. Manufacturing wages are also found to adjust relatively slowly to innovations in prices, but unemployment exerted strong downward pressure on wage growth.
The influence of the household balance sheet, the supply of credit, and uncertainty on consumer spending during the early years of the Great Depression in the USA are…
The influence of the household balance sheet, the supply of credit, and uncertainty on consumer spending during the early years of the Great Depression in the USA are assessed within a unified life-cycle consumption function framework. Income uncertainty played the dominant role in the spending declines of 1930 and 1932. The depletion of households' financial assets contributed modestly to the consumption falls in 1931–1932. Indebtedness, the severe penalties surrounding installment debt default, and the supply of credit had little effect on the consumer spending slump.
The aim of this paper is to identify why the historically observed equity risk premium is larger than most researchers believe is reasonable. Whilst equity is undoubtedly riskier than government issued securities, the extent of the realised premium on equity has been characterised as a “puzzle”.
This paper measures the equity premium for a number of countries over the past 132 years, and then uses a pooled cross‐section and time‐series analysis to investigate the relationship between the equity premium and inflation.
This paper shows that the equity premium over the past 132 years has been significantly positively related to the rate of inflation and, therefore, has resulted in an equity premium that is substantially higher in the post 1914 period than before. This effect results from the relative performance of bonds and stocks during inflationary periods. The relatively poor performance of bonds during periods of inflation drives much of the equity premium.
Counterfactual simulations in the paper show that the average equity premium post 1914 would have been 4.61 per cent and not 7.34 per cent had the rate of inflation been zero. This is much closer to theoretically derived estimates.
The size of the equity premium has implications for investors' asset allocation decision. The importance of inflation suggests that in a low inflation environment, the expected equity premium will be considerably lower than the historically realised equity premium.
This paper establishes a clear link between the rate of inflation and the equity premium.
Management, over time, takes a series of specific strategic actions. As strategic actions we define actions aimed at influencing how the actor is related to other actors…
Management, over time, takes a series of specific strategic actions. As strategic actions we define actions aimed at influencing how the actor is related to other actors. We propose that when a strategic action is committed affects the outcome of the action. An important reason for this is that strategic actions over time can be regarded as interdependent sequences of actions. Timing and sequences may be more or less – or is not at all – preplanned by an actor. In a network perspective a focal actor is dependent on other actors that commit strategic actions. This creates interdependencies that vary over time, which a focal actor influences in a proactive, interactive and/or reactive way. The timing of strategic actions is a general, quite complex and elusive phenomenon to be handled in practice and theory. Despite its importance, very little research has been published.
Volume 22 of Research in Economic History contains six papers. Three are on agriculture and two on macro issues related to the Great Depression. A concluding paper examines trends in interstate migration in the United States.