Working Paper: NBER ID: w16477
Authors: Price V. Fishback
Abstract: The paper provides a survey of fiscal and monetary policies during the 1930s under the Hoover and Roosevelt Administrations and how they influenced the policies during the recent Great Recession. The discussion of the causal impacts of monetary policy focuses on papers written in the last decade and the findings of scholars using dynamic structural general equilibrium modeling. The discussion of fiscal policy shows why economists do not see the New Deal as a Keynesian stimulus, describes the significant shift toward excise taxation during the 1930s, and surveys estimates of the impact of federal spending on local economies. The paper concludes with discussion of the lessons for the present from 1930s monetary and fiscal policy.
Keywords: Monetary Policy; Fiscal Policy; Great Depression; New Deal; Economic Recovery
JEL Codes: E5; E62; N12; N92
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Federal Reserve's monetary policy decisions (E52) | exacerbated the Great Depression (N12) |
| Federal Reserve's choice to maintain the gold standard (F33) | worsened economic conditions (E66) |
| Federal Reserve's failure to adequately respond to bank failures (G28) | worsened economic conditions (E66) |
| Federal Reserve's policies (E52) | decline in real GDP (E20) |
| Federal Reserve's policies (E52) | increased unemployment (J65) |
| Roosevelt administration's shift to a reflationary policy regime (E65) | economic recovery (E65) |
| Exiting the gold standard (F33) | reversing deflationary expectations (E31) |
| Increasing government spending (H59) | economic recovery (E65) |
| Federal spending (H51) | increase in per capita personal income (O49) |
| New tax measures (H26) | minimal overall stimulative impact (E62) |