Working Paper: NBER ID: w18828
Authors: Michael D. Bordo; Hugh Rockoff
Abstract: A Monetary History of the United States 1867 to 1960 published in 1963 was written as part of an extensive NBER research project on Money and Business Cycles started in the 1950s. The project resulted in three more books and many important articles. A Monetary History was designed to provide historical evidence for the modern quantity theory of money. The principal lessons of the modern quantity theory of the long-run neutrality of money, the transitory effects of monetary policy on real economic activity, and the importance of stable money and of monetary rules have all been absorbed in modern macro models. A Monetary History , unlike the other books, has endured the test of time and has become a classic whose reputation has grown with age. It succeeded because it was based on narrative and not an explicit model. The narrative methodology pioneered by Friedman and Schwartz and the beautifully written story still captures the imaginations of new generations of economists.
Keywords: monetary history; quantity theory of money; economic policy
JEL Codes: B22; N1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increases in the money supply (E51) | increases in nominal income (P44) |
| sharp declines in money supply (E51) | sharp declines in output (E32) |
| monetary changes (E42) | temporary effects on real output (F69) |
| long run real output growth is independent of monetary forces (O42) | assertion of monetary neutrality (E49) |