Economist Peter Temin of MIT argues: “If the crash of 1929 was an important independent shock to the economy, then the crash of 1987 should have been equally disastrous.”
a. What does Temin mean by “an important independent shock to the economy”?
b. Why does he argue that what happened to the economy following the crash of 1987 is evidence against the crash of 1929 being an important shock to the economy?
c. How would Christina Romer counter Temin’s argument?