COULD STABLE MONEY HAVE AVERTED THE GREAT CONTRACTION?

MICHAEL D. BORDO, EHSAN U. CHOUDHRI, ANNA J. SCHWARTZ

Research output: Contribution to journalArticlepeer-review

18 Scopus citations

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 languageEnglish (US)
Pages (from-to)484-505
Number of pages22
JournalEconomic Inquiry
Volume33
Issue number3
DOIs
StatePublished - Jul 1995
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • General Business, Management and Accounting
  • Economics and Econometrics

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