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War, money & economy: Inflation and production in the Fed and pre-Fed periods

Author

Listed:
  • Thomas L. Hogan

    (Rice University)

  • Daniel J. Smith

    (Middle Tennessee State University)

Abstract

Do the effects of wars influence our perceptions of U.S. economic performance? This paper compares the rates and volatilities of inflation and GDP growth under the Fed to those in the pre-Fed period adjusting for wars as exogenous shocks. Dividing the pre-Fed periods into subperiods based on changes in the monetary system, we find that performance in the pre-Fed periods is mostly the same as or better than in the post-War II Fed period and the Great Moderation. The rates of inflation under the Fed have generally been higher and the rates of GDP growth lower, but reductions in inflation and GDP volatility are smaller than in other studies and often not statistically significant after accounting for wartime shocks.

Suggested Citation

  • Thomas L. Hogan & Daniel J. Smith, 2022. "War, money & economy: Inflation and production in the Fed and pre-Fed periods," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 35(1), pages 15-37, March.
    • Handle: RePEc:kap:revaec:v:35:y:2022:i:1:d:10.1007_s11138-019-00494-5
    DOI: 10.1007/s11138-019-00494-5
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    More about this item

    Keywords

    Federal Reserve; Inflation; GDP growth; Stability; Volatility;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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