Technology, Credit and Confidence during the Roaring Twenties
We compare and contrast alternative explanations of the Roaring Twenties. Starting with the RBC model as a benchmark, we also examine a model with indeterminacy and self-fulfilling expectations (SFE), and one with credit shocks. Historical and anecdotal evidence provides support for each of these set-ups. We use US data from 1889-1953 to estimate each of the relevant shocks, and the resulting model-driven output. Our results indicate that all three models replicate well the experience of the 1920s. We then estimate "horserace" regressions, which provide evidence of the explanatory power of each model above and beyond the others. Here the SFE model emerges as the winner, leading us to conclude that self-fulfilling confidence was the primary driving force behind the Roaring Twenties.
|Date of creation:||Dec 2007|
|Contact details of provider:|| Postal: 3009 Broadway, New York, NY 10027-6598|
Phone: (212) 854-3454
Fax: (212) 854-8947
Web page: http://www.econ.barnard.columbia.edu/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:brn:wpaper:0901. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Robert O'Connor)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.