Lessons from the New Deal Did the New Deal Prolong or Worsen.pdf

Working Paper No. 581 Lessons from the New Deal: Did the New Deal Prolong or Worsen the Great Depression? by Greg Hannsgen and Dimitri B. Papadimitriou The Levy Economics Institute of Bard College October 2009 GREG HANNSGEN is a research scholar at the Levy Economics Institute. President DIMITRI B. PAPADIMITRIOU is executive vice president and Jerome Levy Professor of Economics at Bard College. The Levy Economics Institute Working Paper Collection presents research in progress by Levy Institute scholars and conference participants. The purpose of the series is to disseminate ideas to and elicit comments from academics and professionals. The Levy Economics Institute of Bard College, founded in 1986, is a nonprofit, nonpartisan, independently funded research organization devoted to public service. Through scholarship and economic research it generates viable, effective public policy responses to important economic problems that profoundly affect the quality of life in the United States and abroad. The Levy Economics Institute P.O. Box 5000 Annandale-on-Hudson, NY 12504-5000 Copyright © The Levy Economics Institute 2009 All rights reserved. ABSTRACT Since the current recession began in December 2007, New Deal legislation and its effectiveness have been at the center of a lively debate in Washington. This paper emphasizes some key facts about two kinds of policy that were important during the Great Depression and have since become the focus of criticism by new New Deal critics: (1) regulatory and labor relations legislation, and (2) government spending and taxation. We argue that initiatives in these policy