Supply-Side Policies in the Depression: Evidence from France / Jérémie Cohen-Setton, Joshua K. Hausman, Johannes F. Wieland.

Format:

Book

Author/Creator:

Cohen-Setton, Jérémie.

Contributor:

National Bureau of Economic Research.

Hausman, Joshua K.

Wieland, Johannes F.

Series:

Working Paper Series (National Bureau of Economic Research) no. w22140.

NBER working paper series no. w22140

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Supply-Side Policies in the Depression

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2016.

Summary:

The effects of supply-side policies in depressed economies are controversial. We shed light on this debate using evidence from France in the 1930s. In 1936, France departed from the gold standard and implemented mandatory wage increases and hours restrictions. Deflation ended but output stagnated. We present time-series and cross-sectional evidence that these supply-side policies, in particular the 40-hour law, contributed to French stagflation. These results are inconsistent both with the standard one-sector new Keynesian model and with a medium scale, multi-sector model calibrated to match our cross-sectional estimates. We conclude that the new Keynesian model is a poor guide to the effects of supply-side shocks in depressed economies.

Notes:

Print version record

March 2016.