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Lessons from the Great Depression for Economic Recovery in 2009

This article compares the Great Depression of the thirties with the current global crisis and offers some useful lessons for designing policies to overcome the crisis and begin a strong recovery. One of the lessons is that a small fiscal expansion has only small effects and that a monetary expansion may help to stabilize the economy even if interest rates are near to zero. In addition, policymakers should avoid reducing the incentives early and should consider that the financial and the real recovery go together.