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Coming to Terms with the Scissors Effect

In: Monetary Policy and the Onset of the Great Depression

Author

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  • Mark Toma

Abstract

This chapter tests the scissors effect and related implications of the two discretionary theories, the Riefler-Burgess (RB) Doctrine and the Miron-plus theory, versus the self-regulated theory of Reserve banking, as presented in the previous two chapters. On the whole, I find that the evidence is consistent with the implications of the self-regulated theory, while at least some of the evidence is inconsistent with the implications of the two discretionary theories. For the period, 1922–28, the major findings for the seasonality of monetary aggregates are as follows: 1. Fed credit is seasonal, rising during the harvest season and falling otherwise. Discount loans are seasonal, rising during the harvest season and falling otherwise. Government security holdings are not seasonal.1 2. The monetary base is seasonal, rising during the harvest season and falling otherwise. Currency and its major component, Federal Reserve notes, are seasonal, rising during the harvest season and falling otherwise. Reserves are not seasonal.

Suggested Citation

  • Mark Toma, 2013. "Coming to Terms with the Scissors Effect," Palgrave Macmillan Books, in: Monetary Policy and the Onset of the Great Depression, chapter 0, pages 85-103, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-37162-1_6
    DOI: 10.1057/9781137371621_6
    as

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