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) |
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Pages (from-to) | 484-505 |
Number of pages | 22 |
Journal | Economic Inquiry |
Volume | 33 |
Issue number | 3 |
DOIs | |
State | Published - Jul 1995 |
Externally published | Yes |
All Science Journal Classification (ASJC) codes
- General Business, Management and Accounting
- Economics and Econometrics