Monetary policy regimes and economic performance: The historical record
In: Handbook of Macroeconomics
AbstractMonetary policy regimes encompass the constraints or limits imposed by custom, institutions and nature on the ability of the monetary authorities to influence the evolution of macroeconomic aggregates.This chapter surveys the historical experience of both international and domestic (national) aspects of monetary regimes from the nineteenth century to the present. We first survey the experience of four broad international monetary regimes: the classical gold standard 1880-1914; the interwar period in which a short-lived restoration of the gold standard prevailed; the postwar Bretton Woods international monetary system (1946-1971) indirectly linked to gold; the recent managed float period (1971-1995). We then present in some detail the institutional arrangements and policy actions of the Federal Reserve in the United States as an important example of a domestic policy regime. The survey of the Federal Reserve subdivides the demarcated broad international policy regimes into a number of episodes.A salient theme in our survey is that the convertibility rule or principle that dominated both domestic and international aspects of the monetary regime before World War I has since declined in its relevance. At the same time, policymakers within major nations placed more emphasis on stabilizing the real economy. Policy techniques and doctrine that developed under the pre-World War I convertible regime proved to be inadequate to deal with domestic stabilization goals in the interwar period, setting the stage for the Great Depression. In the post-World War II era, the complete abandonment of the convertibility principle, and its replacement by the goal of full employment, combined with the legacy of inadequate policy tools and theory from the interwar period, set the stage for the Great Inflation of the 1970s. The lessons from that experience have convinced monetary authorities to reemphasize the goal of low inflation, as it were, committing themselves to rule-like behavior.
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.
This chapter was published in:
This item is provided by Elsevier in its series Handbook of Macroeconomics with number 1-03.
Contact details of provider:
Web page: http://www.elsevier.com/wps/find/bookseriesdescription.cws_home/BS_HE/description
Other versions of this item:
- Michael D. Bordo & Anna J. Schwartz, 1997. "Monetary Policy Regimes and Economic Performance: The Historical Record," NBER Working Papers 6201, National Bureau of Economic Research, Inc.
- E0 - Macroeconomics and Monetary Economics - - General
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.