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Could the United States have had a better central bank? An historical counterfactual speculation

  • Bordo, Michael D.

This article argues that two alternative hypothetical central bank scenarios could have improved upon the Federal Reserve’s track record with respect to financial stability and possibly overall macroeconomic performance in its first century. The first scenario is to assume that the charter of the Second Bank of the United States had not been revoked by Andrew Jackson in 1836 and the Second Bank survived. The second scenario takes as given that the Second bank did not survive and history evolved as it did , but considers the situation in which the Federal Reserve Act of 1913 was closer to the original plan for a central bank proposed by Paul Warburg in 1910.

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Article provided by Elsevier in its journal Journal of Macroeconomics.

Volume (Year): 34 (2012)
Issue (Month): 3 ()
Pages: 597-607

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Handle: RePEc:eee:jmacro:v:34:y:2012:i:3:p:597-607
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622617

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  1. repec:cup:cbooks:9780521391559 is not listed on IDEAS
  2. Michael D. Bordo & Joseph G. Haubrich, 2012. "Deep recessions, fast recoveries, and financial crises: evidence from the American record," Working Paper 1214, Federal Reserve Bank of Cleveland.
  3. Michael D. Bordo & Carlos A. Vegh, 1998. "What If Alexander Hamilton Had Been Argentinean? A Comparison of the Early Monetary Experiences of Argentina and the United States," NBER Working Papers 6862, National Bureau of Economic Research, Inc.
  4. Michael D. Bordo & Owen Humpage & Anna J. Schwartz, 2007. "The historical origins of US exchange market intervention policy," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 12(2), pages 109-132.
  5. Peter L. Rousseau & Richard Sylla, 2001. "Financial Systems, Economic Growth, and Globalization," NBER Working Papers 8323, National Bureau of Economic Research, Inc.
  6. Knodell, Jane, 2003. "Profit and duty in the Second Bank of the United States' exchange operations," Financial History Review, Cambridge University Press, vol. 10(01), pages 5-30, April.
  7. Michael D. Bordo, 1981. "The classical gold standard: some lessons for today," Review, Federal Reserve Bank of St. Louis, issue May, pages 2-17.
  8. Milton Friedman & Anna J. Schwartz, 1963. "A Monetary History of the United States, 1867–1960," NBER Books, National Bureau of Economic Research, Inc, number frie63-1, May.
  9. Beyer, Andreas & Gaspar, Vítor & Gerberding, Christina & Issing, Otmar, 2009. "Opting out of the great inflation: German monetary policy after the breakdown of Bretton Woods," Discussion Paper Series 1: Economic Studies 2009,12, Deutsche Bundesbank, Research Centre.
  10. Michael D. Bordo & Marc Flandreau, 2003. "Core, Periphery, Exchange Rate Regimes, and Globalization," NBER Chapters, in: Globalization in Historical Perspective, pages 417-472 National Bureau of Economic Research, Inc.
  11. Douglas A. Irwin, 2010. "Did France Cause the Great Depression?," NBER Working Papers 16350, National Bureau of Economic Research, Inc.
  12. Goodfriend, Marvin, 2011. "Central banking in the credit turmoil: An assessment of Federal Reserve practice," Journal of Monetary Economics, Elsevier, vol. 58(1), pages 1-12, January.
  13. Michael D. Bordo & David C. Wheelock, 2011. "The promise and performance of the Federal Reserve as Lender of Last Resort 1914-1933," Working Paper 2011/01, Norges Bank.
  14. Selgin, George & Lastrapes, William D. & White, Lawrence H., 2012. "Has the Fed been a failure?," Journal of Macroeconomics, Elsevier, vol. 34(3), pages 569-596.
  15. Bordo, Michael D. & Schwartz, Anna J., 1999. "Monetary policy regimes and economic performance: The historical record," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 3, pages 149-234 Elsevier.
  16. Bordo, Michael D. & White, Eugene N., 1991. "A Tale of Two Currencies: British and French Finance During the Napoleonic Wars," The Journal of Economic History, Cambridge University Press, vol. 51(02), pages 303-316, June.
  17. Barry Eichengreen, 1992. "Golden Fetters: The Gold Standard and the Great Depression, 1919-1939," NBER Books, National Bureau of Economic Research, Inc, number eich92-1, May.
  18. Goodfriend, Marvin, 1988. "Central banking under the gold standard," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 29(1), pages 85-124, January.
  19. Michael D. Bordo & Barry Eichengreen, 1997. "Implications of the Great Depression for the Development of the International Monetary System," NBER Working Papers 5883, National Bureau of Economic Research, Inc.
  20. Peter L. Rousseau, 2000. "Jacksonian Monetary Policy, Specie Flows, and the Panic of 1837," Vanderbilt University Department of Economics Working Papers 0004, Vanderbilt University Department of Economics, revised Jun 2001.
  21. Beyer, Andreas & Gaspar, Vítor & Gerberding, Christina & Issing, Otmar, 2008. "Opting out of the great inflation: German monetary policy after the break down of Bretton Woods," CFS Working Paper Series 2009/01, Center for Financial Studies (CFS).
  22. Miron, Jeffrey A, 1986. "Financial Panics, the Seasonality of the Nominal Interest Rate, and theFounding of the Fed," American Economic Review, American Economic Association, vol. 76(1), pages 125-40, March.
  23. Bordo Michael D. & Dittmar Robert D & Gavin William T., 2007. "Gold, Fiat Money, and Price Stability," The B.E. Journal of Macroeconomics, De Gruyter, vol. 7(1), pages 1-31, August.
  24. Gary Richardson & William Troost, 2009. "Monetary Intervention Mitigated Banking Panics during the Great Depression: Quasi-Experimental Evidence from a Federal Reserve District Border, 1929-1933," Journal of Political Economy, University of Chicago Press, vol. 117(6), pages 1031-1073, December.
  25. Bordo Michael D. & Kydland Finn E., 1995. "The Gold Standard As a Rule: An Essay in Exploration," Explorations in Economic History, Elsevier, vol. 32(4), pages 423-464, October.
  26. Eugene N. White, 2011. ""To Establish a More Effective Supervision of Banking": How the Birth of the Fed Altered Bank Supervision," NBER Working Papers 16825, National Bureau of Economic Research, Inc.
  27. Barry Eichengreen & Marc Flandreau, 2008. "The Rise and Fall of the Dollar, or When Did the Dollar Replace Sterling as the Leading International Currency?," NBER Working Papers 14154, National Bureau of Economic Research, Inc.
  28. Michael D. Bordo & Athanasios Orphanides, 2012. "Introduction to "The Great Inflation: The Rebirth of Modern Central Banking"," NBER Chapters, in: The Great Inflation: The Rebirth of Modern Central Banking, pages 1-22 National Bureau of Economic Research, Inc.
  29. John B. Taylor, 2009. "Getting Off Track - How Government Actions and Interventions Caused, Prolonged, and Worsened the Financial Crisis," Books, Hoover Institution, Stanford University, number 3.
  30. Lucas, Robert E, Jr, 1973. "Some International Evidence on Output-Inflation Tradeoffs," American Economic Review, American Economic Association, vol. 63(3), pages 326-34, June.
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