Abstract
We test the hypothesis that the Great Contraction would have been attenuated had the Federal Reserve not allowed the money stock to decline. We simulate a model that estimates separate relations for output and the price level and assumes that output and price dynamics are not especially sensitive to policy changes. The simulations include a strong and a weak form of Friedman's constant money growth rule. The results support the hypothesis that the Great Contraction would have been mitigated and shortened had the Federal Reserve followed a constant money growth rule.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 484-505 |
| Number of pages | 22 |
| Journal | Economic Inquiry |
| Volume | 33 |
| Issue number | 3 |
| DOIs | |
| State | Published - Jul 1995 |
All Science Journal Classification (ASJC) codes
- Business, Management and Accounting(all)
- Economics and Econometrics