Forecasting Pre-World War I Inflation: The Fisher Effect and the Gold Standard
AbstractThe authors examine interest and inflation rates from 1879 to 1913. Deflation prior to 1896 was followed by inflation. Average U.S. inflation was 3.1 percentage points higher in the years after 1896, yet nominal interest rates were no higher after 1896. This nonadjustment of nominal rates would be consistent with rational expectations if inflation was not forecastable, and indeed univariate tests show little sign of serial correlation. But gold production does forecast inflation. The relationship between mining and inflation was such that expected inflation should have risen 300 basis points between 1890 and 1910. They consider explanations of this failure to foresee the shift in inflation after 1896 and conclude that it is not persuasive evidence that investors ignored relevant information, but does suggest great uncertainty about the appropriate model for analyzing the economy. Copyright 1991, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by MIT Press in its journal Quarterly Journal of Economics.
Volume (Year): 106 (1991)
Issue (Month): 3 (August)
Contact details of provider:
Web page: http://mitpress.mit.edu/journals/
Other versions of this item:
- Robert B. Barsky & J. Bradford De Long, . "Forecasting Pre-World War I Inflation: The Fisher Effect and the Gold Standard," J. Bradford De Long's Working Papers _121, University of California at Berkeley, Economics Department.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Barro, Robert J, 1979. "Money and the Price Level under the Gold Standard," Economic Journal, Royal Economic Society, vol. 89(353), pages 13-33, March.
- Robert B. Barsky & Lawrence H. Summers, 1990.
"Gibson's Paradox and the Gold Standard,"
NBER Working Papers
1680, National Bureau of Economic Research, Inc.
- Barsky, Robert B., 1987.
"The Fisher hypothesis and the forecastability and persistence of inflation,"
Journal of Monetary Economics,
Elsevier, vol. 19(1), pages 3-24, January.
- Robert B. Barsky, 1986. "The Fisher Hypothesis and the Forecastability and Persistence of Inflation," NBER Working Papers 1927, National Bureau of Economic Research, Inc.
- Mitchener, Kris James & Weidenmier, Marc D, 2013. "Searching for Irving Fisher," CAGE Online Working Paper Series 132, Competitive Advantage in the Global Economy (CAGE).
- Robert B. Barsky & J. Bradford De Long, 1992.
"Why Does the Stock Market Fluctuate?,"
NBER Working Papers
3995, National Bureau of Economic Research, Inc.
- Hanes, Christopher & Rhode, Paul W., 2013.
"Harvests and Financial Crises in Gold Standard America,"
The Journal of Economic History,
Cambridge University Press, vol. 73(01), pages 201-246, March.
- Christopher Hanes & Paul W. Rhode, 2012. "Harvests and Financial Crises in Gold-Standard America," NBER Working Papers 18616, National Bureau of Economic Research, Inc.
- Paul Evans & Xiaojun Wang, 2008.
"A Tale of Two Effects,"
The Review of Economics and Statistics,
MIT Press, vol. 90(1), pages 147-157, February.
- Spivak, Avia & Sussman, Nathan, 2008. "Inflation Targeting as the New Golden Standard," CEPR Discussion Papers 7001, C.E.P.R. Discussion Papers.
- Luca Benati, 2006.
"UK monetary regimes and macroeconomic stylised facts,"
Bank of England working papers
290, Bank of England.
- Luca Benati, 2005. "U.K. Monetary Regimes and Macroeconomic Stylised Facts," Computing in Economics and Finance 2005 107, Society for Computational Economics.
- Kandil, Magda, 2005. "Money, interest, and prices: Some international evidence," International Review of Economics & Finance, Elsevier, vol. 14(2), pages 129-147.
- J. Bradford De Long, . "America's Peacetime Inflation: The 1970s," J. Bradford De Long's Working Papers _104, University of California at Berkeley, Economics Department.
- Luis CatÃ£o & G. A. Mackenzie, 2006. "Perspectives on Low Global Interest Rates," IMF Working Papers 06/76, International Monetary Fund.
- J. Bradford De Long, 1996. "America's Only Peacetime Inflation: The 1970s," NBER Historical Working Papers 0084, National Bureau of Economic Research, Inc.
- Perez, Stephen J. & Siegler, Mark V., 2006. "Agricultural and monetary shocks before the great depression: A graph-theoretic causal investigation," Journal of Macroeconomics, Elsevier, vol. 28(4), pages 720-736, December.
- User:Lawrencekhoo/notes in Wikipedia (English)
- Inflation in Wikipedia (English)
- Lạm phát in Wikipedia (Vietnamese)
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Karie Kirkpatrick).
If references are entirely missing, you can add them using this form.