The 1930s Depression in Latin America. A Macro Analysis

The Depression of the 1930s continues to command attention; some urge wholesale revocation of the policy responses it engendered, while many predict its imminent return. An important trend in recent academic studies of the Depression is the broadening of the geographical range of countries analyzed, while adopting a more consciously comparative per-spective. ’ This paper2 extends that work by analyzing selected experiences in Latin America, providing and commenting on comparisons with both Europe and North America. Its goal is to deepen our analytical under-standing of the factors determining changes in prices and output during the period. The basic framework of discussion is simple aggregate supply and demand curves, various aspects of which are investigated below in the different parts of the paper, leading finally to some broad conclusions, The interwar evolution of real output for six Latin American countries is presented in Graph 1; the post-1929 decline in output was greatest in Chile, least in Colombia, while Honduras did not experience a typical cycle during the early 1930~. ~ The decline in GDP started before 192