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Great Spending Crashes

Listed author(s):
  • Beckworth David

    ()

    (Western Kentucky University)

  • Hendrickson Josh

    ()

    (University of Mississippi)

Over the last century, there have been four major peacetime crashes in aggregate nominal spending in the United States. We argue in this paper that these great spending crashes can be best understood from a monetary disequilibrium perspective. We examine this hypothesis using a structural vector autoregression that identifies the key monetary shocks implied by the monetary disequilibrium view. We find that these monetary shocks are the main contributors to each of the great spending crashes.

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Article provided by De Gruyter in its journal The B.E. Journal of Macroeconomics.

Volume (Year): 12 (2012)
Issue (Month): 1 (September)
Pages: 1-28

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Handle: RePEc:bpj:bejmac:v:12:y:2012:i:1:n:28
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  1. Jordi GalĂ­, 1992. "How Well Does The IS-LM Model Fit Postwar U. S. Data?," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 709-738.
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  3. William D. Lastrapes & W. Douglas McMillin, 2004. "Cross-Country Variation in the Liquidity Effect: The Role of Financial Markets," Economic Journal, Royal Economic Society, vol. 114(498), pages 890-915, October.
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  5. Christina D. Romer, 1990. "The Great Crash and the Onset of the Great Depression," The Quarterly Journal of Economics, Oxford University Press, vol. 105(3), pages 597-624.
  6. Lawrence J. Christiano & Roberto Motto & Massimo Rostagno, 2003. "The Great Depression and the Friedman-Schwartz hypothesis," Proceedings, Federal Reserve Bank of Cleveland, pages 1119-1215.
  7. Keating, John W., 1996. "Structural information in recursive VAR orderings," Journal of Economic Dynamics and Control, Elsevier, vol. 20(9-10), pages 1557-1580.
  8. John R. Walter, 2005. "Depression era bank failures : the great contagion of the great shakedown?," Economic Quarterly, Federal Reserve Bank of Richmond, issue Win, pages 39-54.
  9. Bordo, Michael D. & Choudhri, Ehsan U. & Schwartz, Anna J., 2002. "Was Expansionary Monetary Policy Feasible during the Great Contraction? An Examination of the Gold Standard Constraint," Explorations in Economic History, Elsevier, vol. 39(1), pages 1-28, January.
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