Ben Bernanke has described the discovery of the causes of the great depression as the "Holy Grail of macroeconomics". He has written extensively on the subject, drawing upon evidence of its incidence outside the United States to test and evaluate the rival theories. He has concluded that the evidence gives "much support for the monetary view" as put forward by Friedman and Schwartz, but that it does not provide a complete explanation for the depth and, especially, the duration of the downturn. His own extension of their findings is advanced in the second chapter of his book of essays, under the title of "Nonmonetary Effects of the Financial Crisis and the Propagation of the Great Depression". He argues that, in addition to its effects via the money supply, the financial crisis had raised, what he terms the "cost of credit intermediation", which exerted a further downward pressure on economic activity. He notes that the duration of a credit crunch depends upon the time it takes to both revive the channels of credit flow, and rehabilitate insolvent debtors - and that, since those are slow processes, they supplement the monetary explanation with a plausible reason for the unusual persistence of the depression.
- Ben Bernanke Essays on the Great Depression Princeton University Press, 2000