Economic Impact of Presidents and War: Did FDR or WW2 End the Great Depression?

• Activity Number: 450
• Type: Contributed
• Date/Time: Tuesday, August 2, 2016 : 2:00 PM to 2:45 PM
• Sponsor: Business and Economic Statistics Section
• Author(s): Spencer Graves* and Jouni Helske
• Companies: and University of Jyväskylä
• Keywords: economic growth ; Franklin Roosevelt ; World War II ; wars ; presidents

Abstract

Economists claim that World War II (WW2) not Franklin Roosevelt (FDR) ended the Great Depression. U.S. average annual income (Gross Domestic Product, GDP, per capita adjusted for inflation) grew by 10.6 percent per year during WW2 (1939-1945) and only 6.2 percent per year under FDR before the war (1933-1939). If WW2 not FDR ended the Great Depression, we would expect to see (a) similar growth spurts during other wars, and (b) sufficient variability between the economic performance of other presidents to make FDR's performance consistent with that of other presidents. We evaluate the relative impact of presidents and wars using a combination of state space and random effects modeling applied to data on (i) U.S. GDP from 1790 to the present available from "MeasuringWorth.com" and (ii) conflicts from "correlatesofwar.org".