Working Paper: NBER ID: w2549
Authors: Michael D. Bordo
Abstract: This paper assesses the role of Friedman and Schwartz's "A Monetary History of the United Slates: 1867 to 1960" as a progenitor of research in monetary history. The paper critically surveys the literature on three major themes in the book: monetary disturbances; the domestic monetary framework and monetary policy: and monetary standards. The book's unique portrayal of the historical circumstances of monetary disturbances and of alternative institutional arrangements serves as the closest thing to a laboratory experiment for the monetary economist. Historical study has become an important tool of modern macroeconomic research.
Keywords: Monetary History; Banking Panics; Monetary Policy
JEL Codes: N11; E52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Monetary disturbances (E49) | Declines in economic activity (E32) |
| Sharp downturns in the money supply (E51) | Economic contractions (E32) |
| Banking panics of 1929-33 (F65) | Significant decline in the money supply (E51) |
| Significant decline in the money supply (E51) | Severe economic contractions (N13) |
| Federal Reserve's failure to act as a lender of last resort (E58) | Severity of the Great Depression (N13) |
| Introduction of federal deposit insurance in 1934 (G28) | Stabilization of the banking system (G28) |
| Stabilization of the banking system (G28) | Prevention of further monetary contractions (E63) |