At the onset of the Depression, governments confronted a collapse in output without the benefit of knowing what that output was.
The US national accounts had yet to be invented, so the Hoover and Roosevelt administrations based policy on shards of evidence: the behaviour of stock prices, freight-car loadings, production data from particular companies. The dearth of reliable economic measures provoked a minor revolution. Simon Kuznets led the economics profession in creating statistics for gross domestic product and much more.
Now, in the wake of the financial crisis, the question is whether a new Kuznets revolution is possible today. On one side you have thinkers who call for the creation of economy-wide financial risk statistics , who pushed successfully for last year’s launch of the US Office of Financial Research. On the other side is Andy Haldane, executive director for financial stability at the Bank of England. In a speech at the Fed’s Jackson Hole conference last week, Mr Haldane subversively argued that the neo-Kuznets vision could be a trap.