Unit 17: The Great Depression, Golden Age, and Global Financial Crisis
Introduction
– Three economic epochs of the last century: the Great Depression, the Golden Age, and
the Financial Crisis
– Economic Successes and causes of eventual failures
– Lessons that policymakers learned from each epoch
Good policies and institutions can promote economic growth and stabilize the economy
during a recession
Major Recessions and slowdowns in growth are due to policy and institutional failures
– What caused the economic failures of the last century
– What policy making lessons can we learn from the past
The Three Economic Epochs
The three epochs of modern capitalism were worldwide phenomena, but some countries
experienced them differently compared to the US
The Great Depression
Causes: The Great Depression = The period during the 1930s in which there was a sharp fall in
output and employment in many countries
– Caused by 3 simultaneous positive feedback mechanisms in the US:
o Pessimism about the future – households reacted to the 1929 stock market crash
