Friday, March 1, 2013

The Great Depression in Europe: Real GDP Data for 18 nations

Here is data on real GDP loss and the duration of the Great Depression for 18 European nations, ranked from the most severe to the least severe real output loss:
Nation | Real GDP Loss | Years of Contraction
(1) Austria | -22.45% | 1929–1933
(2) Poland | -20.70% | 1930–1933
(3) Czechoslovakia | -18.19% | 1930–1935
(4) Germany | -16.11% | 1929–1932
(5) France | -14.65% | 1930–1932
(6) Yugoslavia | -13.69% | 1930–1932
(7) Bulgaria | -12.72% | 1934–1935
(8) Netherlands | -9.46% | 1930–1934
(9) Hungary | -9.36% | 1930–1932
(10) Switzerland | -8.02% | 1930–1932
(11) Belgium | -7.89% | 1929–1932
(12) Norway | -7.75% | 1931
(13) Sweden | -6.20% | 1931–1932
(14) UK | -5.80% | 1930–1931
(15) Romania | -5.57% | 1932
(16) Italy | -5.47% | 1930–1931
(17) Romania | -4.57% | 1929
(18) Finland | -3.97% | 1930–1932
(19) Denmark | -2.62% | 1932
(20) Bulgaria | -1.91%* | 1929

* The recession in Bulgaria in 1929 may not actually have been caused by the Great Depression, but by Bulgaria’s deflationary return to the Gold Standard in 1928.
What leaps out of the data for me is Austria.

Austria had the worst depression in Europe (amongst the nations examined above) in terms of real GDP loss, which can be seen in the graph below. After a terrible real output collapse of -22.45% from 1929 to 1933, essentially stagnation followed until 1936. A uptick occurred in 1937, but in 1938 Austria was seized by Nazi Germany and entered a different economic system. The first years of the Nazi Regime are shown in the ellipse.

Curiously, the Austrian government (and from 1933 the dictatorship) was taking some kind of policy advice from Ludwig von Mises – patron saint of Austrian economics.

Aside from some corporatist interventions, successive Austrian governments pursued deflationary policies, budget balancing and austerity. It is likely that Mises would have strongly approved of the latter measures. And what do you know? Worst depression in Europe (as far as I know).

If we look at Austrian unemployment during the 1930s which can be seen in the graph below, it was remarkably bad too: it shows no real recovery until after the Anschluss (12 March, 1938).

Of course, I am being a bit rhetorical here. No, I do not think Mises was really to blame for the depth of the depression in Austria. Plenty of other nations pursued austerity too and had severe depressions.

But, as a policy adviser to the Austrian government, whatever contractionary policies that Mises recommended and that were in fact followed were clearly disastrous.

To be fair, there may have been other factors that account for the depth of the depression in Austria: perhaps its banking system collapsed to a greater extent than other nations, and perhaps it was exposed to international trade to a far greater extent.

Still, the data makes you wonder.


  1. Austria was known at this time as a very Bohemian place. That was great for cultural reasons but they tended to put idiots in charge of policy. Schumpeter (yes,I know some PKs like him, but I think he's an idiot) was finance minister there at the time and his record, like his record in investing, was atrocious. And then they listened to the cranks in the 1930s.

    Its fairly well-known that Hitler was largely welcomed in 1938. A lot of people had become, as they had in Germany, sick of democracy and liberalism. But because of Austrian culture they didn't see it as acceptable to elect the fascists themselves.

    Me? I do think that the likes of Hayek, Mises and Bruning and all of what we'd call Austerians today were directly to blame for Hitler. And then it was, as I showed in that series and that interview, these very people who created the myths of why these monsters got into power. Ironically, these myths stand behind what is being done in Greece today. And as the fascists emerge once more the Austrians and the Austerians just ignore it and continue talking vapidly about Big Guv'ment tyrruny.

    These people disgust me, to be honest. They are emotionally driven idiots who have their heads firmly wedged up their... you know where... Ignorance and myopia can be a very dangerous thing when it reaches certain levels.

    1. Schumpeter (yes,I know some PKs like him, but I think he's an idiot)

      That's a remarkable statement. People can be wrong sometimes, can even say idiotic things without being idiots. You really don't think he is worth reading, that Minsky & PK & MMT got nothing from him? (Calgacus)

  2. Hi LK,

    Do you have any statistics on the US 'money supply' during the 19th century?

    1. Not ready to hand. I would have to go looking for them.

      I suppose Friedman's book would have the data.