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Before the Accord: US Monetary-Financial Policy 1945-51

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  • Eichengreen, Barry
  • Gerber, Peter M.

Abstract

Thia paper analyzes U.S. monetary-financial policy in the period leading up to the Treasury-Fed Accord. We model policy as an implicit target zone for the price level and an explicit zone for interest rates, and the difficulties on the eve of the Accord as an incipient run on a collapsing target-zone regime. The regime was implemented to maintain the stability of the financial system in a period when there was a serious maturity mismatch between the assets and liabilities of the banking system.
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Suggested Citation

  • Eichengreen, Barry & Gerber, Peter M., 1990. "Before the Accord: US Monetary-Financial Policy 1945-51," Department of Economics, Working Paper Series qt9x3540q8, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    • Handle: RePEc:cdl:econwp:qt9x3540q8
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    References listed on IDEAS

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    1. Robert P. Flood & Peter M. Garber, 1991. "The Linkage Between Speculative Attack and Target Zone Models of Exchange Rates," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(4), pages 1367-1372.
    2. Miller, Marcus & Weller, Paul, 1988. "Solving Stochastic Saddlepoint Systems: A Qualitative Treatment With Economic Applications," Economic Research Papers 268343, University of Warwick - Department of Economics.
    3. Svensson, Lars E. O., 1991. "Target zones and interest rate variability," Journal of International Economics, Elsevier, vol. 31(1-2), pages 27-54, August.
    4. Charles R. Whittlesey, 1946. "Federal Reserve Policy in Transition," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 60(3), pages 340-350.
    5. Paul R. Krugman, 1988. "Target Zones and Exchange Rate Dynamics," NBER Working Papers 2481, National Bureau of Economic Research, Inc.
    6. Milton Friedman & Anna J. Schwartz, 1963. "A Monetary History of the United States, 1867–1960," NBER Books, National Bureau of Economic Research, Inc, number frie63-1.
    7. Bertola, Giuseppe & Caballero, Ricardo J, 1992. "Target Zones and Realignments," American Economic Review, American Economic Association, vol. 82(3), pages 520-536, June.
    8. Froot, Kenneth A. & Obstfeld, Maurice, 1991. "Exchange-rate dynamics under stochastic regime shifts : A unified approach," Journal of International Economics, Elsevier, vol. 31(3-4), pages 203-229, November.
    9. Toma, Mark, 1982. "Inflationary bias of the Federal Reserve System : A bureaucratic perspective," Journal of Monetary Economics, Elsevier, vol. 10(2), pages 163-190.
    10. Paul R. Krugman, 1987. "Trigger Strategies and Price Dynamics in Equity and Foreign Exchange Markets," NBER Working Papers 2459, National Bureau of Economic Research, Inc.
    11. Edward C. Simmons, 1950. "The Monetary Mechanism Since the War," Journal of Political Economy, University of Chicago Press, vol. 58(2), pages 124-124.
    12. Paul Krugman & Julio Rotemberg, 1990. "Target Zones with Limited Reserves," NBER Working Papers 3418, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Jagjit S. Chadha & Philip Turner & Fabrizio Zampolli, 2013. "The ties that bind: monetary policy and government debt management," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 29(3), pages 548-581, AUTUMN.
    2. Bassetto, Marco & Phelan, Christopher, 2015. "Speculative runs on interest rate pegs," Journal of Monetary Economics, Elsevier, vol. 73(C), pages 99-114.
    3. Owen F. Humpage & Sanchita Mukherjee, 2013. "Even keel and the Great Inflation," Working Papers (Old Series) 1315, Federal Reserve Bank of Cleveland.
    4. Marvin Goodfriend, 2000. "Overcoming the zero bound on interest rate policy," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, pages 1007-1057.
    5. Niall Ferguson & Andreas Schaab & Moritz Schularick, 2015. "Central Bank Balance Sheets: Expansion and Reduction since 1900," CESifo Working Paper Series 5379, CESifo.
    6. Owen F. Humpage, 2014. "Independent within—not of—Government: The Emergence of the Federal Reserve as a Modern Central Bank," Working Papers (Old Series) 1402, Federal Reserve Bank of Cleveland.

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