Many analyses have shown that loss of exports via linkages have had an important role in internationalizing the Great Depression, as well as the Crisis of 2007. In fact, during the first year of both downfalls the rate of real exports fell by approximately 20% and the global output reduced on average by 4%. Despite the similarities between these two crises, the causes for them were not the same. During the 2007 crisis uncertainty and changes in the structure of trade seem to be the main reasons in the decline of trade, however, during the Great Depression it was mostly caused by income declines and trade barriers, typical for that century. One big difference between the two crises is, that during the Great depression the trade has already started to recover, while the situation still continued to get worse. According to Grossman and Meissner (2010), “Today’s Great Recession has produced an almost equally impressive trade decline in its first year. The fact that trade is rebounding quickly is cause for optimism and a reminder that some lessons have been learned but challenges remain.” (p. …show more content…
During the 1930s a huge wave of banking crisis occurred in the US. Between 1929 and 1933 over 10000 commercial banks of existing 25000 stopped working. Mitchener (2004) analyses, if differences in bank supervision and regulation in different states of the US affected the regional variation in bank suspensions during the Great Depression. Some US states experiences higher numbers of bank suspensions and failures in comparison to other states. Three quarter of all the banks that were suspended were operating under different regulations, depending on the state they were located