INTRODUCTION

The interwar era has been embedded in the collective memory of policy-makers and economists as an epoch of mass unemployment, poor long-run economic growth, disintegrating world trade and excessive volatility in real output. These descriptive details imply that the period was one of change relative to the past. Change, however, does not necessarily mean discontinuity with the past. This chapter evaluates a number of perspectives on the phasing of economic growth as a way of gaining an insight into the extent of continuity and change over time. In order to help the student appreciate the kind of changes that were taking place in the interwar era the appendix to this chapter provides a pictorial survey of some of the key variables that are of interest to macroeconomists.

ECONOMIC EPOCHS AS LONG CYCLES

Economic growth in modern industrial societies has sometimes been viewed in terms of long cycles in output and prices with an approximate duration of fifty to sixty years, often referred to as Kondratieff waves. The cycle is described by a series of alternating fast and slow phases of economic growth. Kondratieff and a number of more recent empirical analyses (Van Duijn, 1983; Kleinknecht, 1987) offer the following historical timing for the phases of the long cycle:

Within this framework the interwar period is viewed as the downswing phase of a long cycle, encapsulating an era of slow economic growth, poor investment opportunities, mass unemployment and price deflation.