Barry Eichengreen and Kevin H. O’Rourke summarise how our Great Recession differs from the Great Depression of our forefathers. A quick summary:
- Industrial production, stock prices and trade are doing as badly in these early months, if not worse.
- But the policy responses are better; our knowledge and economic policy institutions are better when compared with 1929.
India is likely to be in the worst downturn since the early 1990s, but at present the politics does not support an economic policy response of the quality of what was done by Narasimha Rao in the early 1990s or Vajpayee over 1999-2002. See Somasekhar Sundaresan in Business Standard and this editorial there. We are headed into some difficult weeks.