Question

Make a comparison between the Great Depression of the 1930s and the Great Recession of 2008/09. (There is useful material on the voxeu website by Eichengreen and others). How does the 2008/09 crisis compare with previous financial crises in terms of its causation and severity?

Answer 1

An economy is termed to be in the recession when GDP shrinks in two consecutive quarters. While depression can be seen as a very severe recession.

Comparison between the Great Depression of the 1930s and the Great Recession of 2008/09

	Great Recession	Great Depression
Banks	There was a failure of 57 banks which represents the 0.6% of all the banks.	It resulted in more than 9000 banks all over the country which represents more than 50% of total banks.
Unemployment	The level of unemployment increased till 10% and then it came down to 8.5%	In it, this rose up to 25%
Stock Market	Dow Johns lost 50% of its value before recovering	The Dow Jones Industrial Average lost nearly 90% of its value
Emergency spending programs	Government spend more than 2.5% of GDP	Government spend 1% of GDP