Arresting Banking Panics: Federal Reserve Liquidity Provision and the Forgotten Panic of 1929
Scholars differ on whether central bank intervention mitigates banking panics. In April 1929, a fruit fly infestation in Florida forced the U.S. government to quarantine fruit shipments from the state and destroy infested groves. In July, depositors panicked in Tampa and surrounding cities. The Federal Reserve Bank of Atlanta rushed currency to member banks beset by runs. We show that this intervention arrested the panic and estimate that bank failures would have been twice as high without the Federal Reserve's intervention. Our results suggest that similar interventions may have reduced bank failures during the Great Depression.
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References listed on IDEAS
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- Wicker,Elmus, 1996. "The Banking Panics of the Great Depression," Cambridge Books, Cambridge University Press, number 9780521562614, Junio.
- Eichengreen, Barry, 1996.
"Golden Fetters: The Gold Standard and the Great Depression, 1919-1939,"
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- Arvind Krishnamurthy, 2010. "Amplification Mechanisms in Liquidity Crises," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(3), pages 1-30, July.
- 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.
- repec:ucp:bkecon:9780226519999 is not listed on IDEAS
- 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, September.
- Wood,John H., 2005. "A History of Central Banking in Great Britain and the United States," Cambridge Books, Cambridge University Press, number 9780521850131, Junio.
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