In 1992, Christina Romer published an article titled “What Ended the Great Depression?” in The Journal of Economic History. In her introduction, Roper explains how America recovered from the Great Depression:
This paper examines the role of aggregate-demand stimulus in ending the Great Depression. Plausible estimates of the effects of fiscal and monetary changes indicate that nearly all the observed recovery of the U.S. economy prior to 1942 was due to monetary expansion [emphasis mine]. A huge gold inflow in the mid- and late 1930s swelled the money stock and stimulated the economy by lowering real interest rates and encouraging investment spending and purchases of durable goods. That monetary developments were crucial to the recovery implies that self-correction played little role in the growth of real output between 1933 and 1942.
Mrs. Romer is now the chair of President Obama’s Council of Economic Advisers and was the co-author the administration’s economic recovery plan.