Did Monetary Forces Cause the Great Depression? challenges Friedman's "money hypothesis" and sharply criticizes many features of the Keynesian "spending hypothesis."
You have to have a solid grounding in econometrics and statistics to follow the ins and outs of M.I.T. professor Peter Temin's "testing" of the monetarist vs. the fiscal theories of the Great Depression: was it caused by a drop in expenditures, particularly consumption (as the Keynesians maintain), or the result of bank failures? Friedman and Schwartz's classic Monetary History of the United States provides the standard for the latter theory, while the truth according to the fiscal economists is derived from a series of econometric models. Each idea is analyzed via equations and tables which illustrate the relative activity in various sectors for this period, thus correlating each hypothesis step by step with a sort of historical U.S. balance sheet. We can tell you that the professor concludes that "there is no evidence that the banking panic of 1930 had a deflationary effect on the economy [whereas] the data are. . . consistent with the spending hypothesis"; but we cannot vouch for the complicated methodology. The controversial implications of the conclusion for policy-makers are evident (though Temin is certainly not given to generalization, sweeping or otherwise) but outside that empyrean realm, this exceedingly dry, slow-as-molasses, deliberate, and technically recondite analysis will find no readers at all. (Kirkus Reviews)