This paper was written for Economics 1339: Generating Wealth of Nations, a Harvard undergraduate course taught by visiting professor Jeffrey Borland.
The recent economic downturn of the late-2000s, labeled the “Great Recession” by some, shares several interesting characteristics with the Great Depression of the 1930s. This is especially surprising given the vast body of economic study dedicated to the ascertainment of the Great Depression’s causes and ways to ensure that such an economic crisis never occurs again. The existence of such parallels, then, underlines the power of economic forces to produce these business cycles despite mankind’s best attempts to stabilize the worldwide economy. This paper aims to investigate commonalities and differences between the Great Depression and the Great Recession and furthermore to motivate the study’s relevance to policy reform attempts at combating the most recent contraction. To do so, it examines two aspects of each crisis – its probable causes and the manner of its subsequent worldwide propagation.