Suchergebnisse

This lecture examines the lessons learned from the fiscal policy response to the Covid-19 pandemic. For each lesson, it discusses how the pandemic experience corroborates or contradicts earlier evidence on the efficacy and optimal design of fiscal policy. It also considers whether the lessons from the pandemic are likely to carry over to future recessions.

Prices rose in most years between 1933 and 1941 even though output was substantially below trend. This inflation cannot be explained as simply the effect of devaluation and changes in expectations. Rather, because prewar price changes depended significantly on the growth rate of real output, the extraordinarily rapid growth after 1933 was an important force leading to inflation. At the same time, the NIRA, by encouraging minimum wages and collusive pricing arrangements, caused a crucial diminution of the usual deviation-from-trend effect. The conjunction of these forces caused inflation at a time when the U.S. economy remained depressed.

This article evaluates the consistency of the NBER business cycle reference dates. It finds that the early reference dates are derived from detrended data, whereas the dates after 1927 are derived from data in levels. To evaluate the importance of this and other changes in technique, I derive a simple algorithm that matches the postwar NBER peaks and troughs closely. When this algorithm is applied to data for 1884 to 1940, the new prewar dates differ systematically from the NBER dates and challenge the conventional view that recessions have gotten shorter over time.

This paper examines the role of aggregate-demand stimulus in ending the Great Depression. Plausible estimates of the effects of fiscal and monetary changes indicate that nearly all the observed recovery of the U.S. economy prior to 1942 was due to monetary expansion. A huge gold inflow in the mid- and late 1930s swelled the money stock and stimulated the economy by lowering real interest rates and encouraging investment spending and purchases of durable goods. That monetary developments were crucial to the recovery implies that self-correction played little role in the growth of real output between 1933 and 1942.

The article derives a new monthly index of industrial production for the United States for 1884 to 1940. This index improves upon existing measures of industrial production by excluding indirect proxies for industrial activity, using only component series that are consistent over time, and not making ad hoc adjustments to the data. Analysis of the new index shows that it has more within-year volatility than conventional indexes, has relatively unimportant seasonal fluctuations, and has cyclical turning points that are grossly similar to but subtly different from existing series.

The narrative approach to macroeconomic identification uses qualitative sources, such as newspapers or government records, to provide information that can help establish causal relationships. This paper discusses the requirements for rigorous narrative analysis using fresh research on the impact of monetary policy as the focal application. We read the historical Minutes and Transcripts of Federal Reserve policymaking meetings to identify significant contractionary and expansionary changes in monetary policy not taken in response to current or prospective developments in real activity for the period 1946 to 2016. We find that such monetary shocks have large and significant effects on unemployment, output, and inflation in the expected directions. Analysis of available policy records suggests that a contractionary monetary shock likely occurred in 2022. Based on the empirical estimates of the effect of previous shocks, one would expect substantial negative impacts on real GDP and inflation in 2023 and 2024. (JEL E31, E52, E58, E65, N12)