Working Paper: NBER ID: w2344
Authors: Robert B. Barsky; N. Gregory Mankiw; Jeffrey A. Miron; David N. Weil
Abstract: This paper evaluates the role of the destruction of the gold standard and the founding of the Federal Reserve, both of which occurred in 1914, in contributing to observed changes in the behavior of interest rates and prices after 1914. The paper presents a model of policy coordination in which the introduction of the Fed stabilizes interest rates, even if the gold standard remains intact, and it offers empirical evidence that the dismantling of the gold standard did not play a crucial role in precipitating the changes in interest rate behavior.
Keywords: interest rates; prices; gold standard; Federal Reserve
JEL Codes: E31; E42; N12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Founding of the Federal Reserve (E58) | Stabilization of interest rates (E43) |
| Destruction of the gold standard (N14) | Changes in interest rate behavior (E43) |
| Founding of the Federal Reserve (E58) | Changes in financial markets (G19) |
| Destruction of the gold standard (N14) | Stabilization of interest rates (E43) |