Great Depression in the United States government dealt with economic downturns, such as the use of stimulus packages, Keynesian economics, and Social Security. It also shaped modern American literature, resulting in famous novels such as John Steinbeck's "The Grapes of Wrath" and "Of Mice and Men". Examining the causes of the Great Depression raises multiple issues: what factors set off the first downturn in 1929; what structural weaknesses and specific events turned it into a major depression; how the downturn spread from country to country; and why the economic recovery was so prolonged. Many banks began to fail in October 1930 when farmers defaulted on loans.
Causes of the Great Depression monetary shocks, productivity shocks, and banking shocks – but those developments become positive after 1933 due to monetary and banking reform policies. According to the model Cole-Ohanian impose, the main culprits for the prolonged depression were labor frictions and productivity/efficiency frictions (perhaps, to a lesser extent). Financial frictions are unlikely to have caused the prolonged slump. In the Cole-Ohanian model there is a slower than normal recovery which they explain by New Deal policies which they evaluated as tending towards monopoly and distribution of wealth. The key economic paper looking at these diagnostic sources in relation to the Great Depression