scholarly journals Was the Great Depression a Watershed for American Monetary Policy?

10.3386/w5963 ◽  
1997 ◽  
Author(s):  
Charles Calomiris ◽  
David Wheelock
Keyword(s):  
Monetary Policy ◽  
Great Depression ◽  
The Great Depression

scholarly journals Shifts in US Federal Reserve Goals and Tactics for Monetary Policy: A Role for Penitence?

2013 ◽  
Vol 27 (4) ◽  
pp. 65-86 ◽  
Author(s):  
Julio J Rotemberg
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Great Depression ◽  
Federal Reserve ◽  
Bank Loans ◽  
The Great Depression

This paper considers some of the large changes in the Federal Reserve's approach to monetary policy. It shows that, in some important cases, critics who were successful in arguing that past Fed approaches were responsible for mistakes that caused harm succeeded in making the Fed averse to these approaches. This can explain why the Fed stopped basing monetary policy on the quality of new bank loans, why it stopped being willing to cause recessions to deal with inflation, and why it was temporarily unwilling to maintain stable interest rates in the period 1979–1982. It can also contribute to explaining why monetary policy was tight during the Great Depression. The paper shows that the evolution of policy was much more gradual and flexible after the Volcker disinflation, when the Fed was not generally deemed to have made an error.

Back to Basics: Reserve Requirements and Money Stock Changes, 1929–1936

2000 ◽  
Vol 44 (1) ◽  
pp. 62-69 ◽  
Author(s):  
Robert F. Stauffer
Keyword(s):  
Monetary Policy ◽  
Great Depression ◽  
Federal Reserve ◽  
Money Stock ◽  
Reserve Requirement ◽  
Reserve Requirements ◽  
Money Multiplier ◽  
The Great Depression

This paper explains how the shift of deposits from nonmember banks and country banks to larger member banks increased the average or “effective” reserve requirement in the 1929–1936 period. The result was an inappropriate tightening of monetary conditions, along with liquidity problems for those banks most susceptible to failure. A basic money multiplier model is developed to help clarify the possible impact of increases in effective reserve requirements. The resulting perspective strengthens the usual charges against the Federal Reserve of monetary policy malfeasance during the Great Depression.

War and the Next Lesson

Money ◽  
2017 ◽  
Author(s):  
John Kenneth Galbraith ◽  
James K. Galbraith
Keyword(s):  
United States ◽  
Monetary Policy ◽  
World War Ii ◽  
Fiscal Policy ◽  
World War I ◽  
Great Depression ◽  
The United States ◽  
World War ◽  
John Maynard Keynes ◽  
The Great Depression

This chapter examines the lessons of World War II with respect to money and monetary policy. World War I exposed the fragility of the monetary structure that had gold as its foundation, the great boom of the 1920s showed how futile monetary policy was as an instrument of restraint, and the Great Depression highlighted the ineffectuality of monetary policy for rescuing the country from a slump—for breaking out of the underemployment equilibrium once this had been fully and firmly established. On the part of John Maynard Keynes, the lesson was that only fiscal policy ensured not just that money was available to be borrowed but that it would be borrowed and would be spent. The chapter considers the experiences of Britain, Germany, and the United States with a lesson of World War II: that general measures for restraining demand do not prevent inflation in an economy that is operating at or near capacity.

DID THE FED RESPOND TO LIQUIDITY SHORTAGE EPISODES DURING THE GREAT DEPRESSION?

2018 ◽  
Vol 22 (7) ◽  
pp. 1727-1749 ◽  
Author(s):  
Olivier Damette ◽  
Antoine Parent
Keyword(s):  
New York ◽  
Monetary Policy ◽  
Great Depression ◽  
Liquidity Risk ◽  
Conventional Wisdom ◽  
Credit Spreads ◽  
Open Market ◽  
The Great Depression ◽  
Econometric Evidence ◽  
Open Markets

The October 1929 crash led to a complete freeze of New York open markets. Studying the Fed monetary policy conduct in a nonlinear framework, using credit spreads between open market rates and the Fed's instrument rates as a proxy for liquidity risk, we present econometric evidence that the Fed was well aware of such risks as early as 1930, reacted to the financial stress and altered its monetary policy in consequence. Our outcomes revisit conventional wisdom about the presumed passivity of the Fed throughout the 30s.

scholarly journals The Slide to Protectionism in the Great Depression: Who Succumbed and Why?

2010 ◽  
Vol 70 (4) ◽  
pp. 871-897 ◽  
Author(s):  
Barry Eichengreen ◽  
Douglas A. Irwin
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Trade Policy ◽  
Great Depression ◽  
Gold Standard ◽  
Trade Policies ◽  
Trade Barriers ◽  
The Great Depression ◽  
Cross Country ◽  
Import Quotas

The Great Depression was marked by a severe outbreak of protectionist trade policies. But contrary to the presumption that all countries scrambled to raise trade barriers, there was substantial cross-country variation in the movement to protectionism. Specifically, countries that remained on the gold standard resorted to tariffs, import quotas, and exchange controls to a greater extent than countries that went off gold. Just as the gold standard constraint on monetary policy is critical to understanding macroeconomic developments in this period, exchange rate policies help explain changes in trade policy.

scholarly journals Monetary Policy: From There to Here to Where?

2013 ◽  
pp. 1-6
Author(s):  
Mark Sniderman
Keyword(s):  
Economic Theory ◽  
Monetary Policy ◽  
Great Depression ◽  
Federal Reserve ◽  
Lessons Learned ◽  
The Past ◽  
The Great Depression ◽  
New Framework

Drawing from his long experience participating in the policymaking process at the Federal Reserve, chief policy officer Mark Sniderman shares his views on how the Federal Reserve's framework for conducting monetary policy has evolved over the past decade. He explains how changes in economic theory have helped shaped this new framework and how lessons learned from the Great Depression and Japan's recent struggle with deflation have contributed. This Commentary is based on a speech delivered at the Global Interdependence Conference, Tokyo, Japan, on December 4, 2012.

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