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Regional Monetary Policies and the Great Depression

Author

Listed:
  • Pooyan Amir-Ahmadi
  • Gustavo S. Cortes
  • Marc D. Weidenmier

Abstract

We compile a new monthly database for each Federal Reserve district between 1923-33 to analyze the national and regional nature of the monetary transmission mechanism around the Great Depression. We employ sign-identified structural VARs and narrative sign restrictions informed by uncontroversial theory and the historical record. Our findings demonstrate that there was significant heterogeneity in regional monetary policy as well as its dynamic effects on real economic activity. Prices in the 12 Fed districts were generally more responsive to contractionary regional monetary policy than national monetary policy shocks. The district reserve banks played a key role in the great contraction.

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  • Pooyan Amir-Ahmadi & Gustavo S. Cortes & Marc D. Weidenmier, 2020. "Regional Monetary Policies and the Great Depression," NBER Working Papers 26695, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26695
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    Cited by:

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    2. Cortes, Gustavo S. & Taylor, Bryan & Weidenmier, Marc D., 2022. "Financial factors and the propagation of the Great Depression," Journal of Financial Economics, Elsevier, vol. 145(2), pages 577-594.
    3. Breitenlechner, Max & Mathy, Gabriel P. & Scharler, Johann, 2021. "Decomposing the U.S. Great Depression: How important were loan supply shocks?," Explorations in Economic History, Elsevier, vol. 79(C).

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    More about this item

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-

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