IDEAS home Printed from https://ideas.repec.org/p/brn/wpaper/0901.html
   My bibliography  Save this paper

Technology, Credit and Confidence during the Roaring Twenties

Author

Listed:
  • Sharon Harrison

    () (Barnard College, Columbia University)

  • Mark Weder

    () (University of Adelaide)

Abstract

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.

Suggested Citation

  • Sharon Harrison & Mark Weder, 2007. "Technology, Credit and Confidence during the Roaring Twenties," Working Papers 0901, Barnard College, Department of Economics.
  • Handle: RePEc:brn:wpaper:0901
    as

    Download full text from publisher

    File URL: http://www.econ.barnard.columbia.edu/working_papers/wp0901.pdf
    Download Restriction: no

    More about this item

    Keywords

    Sunspots; Indeterminacy; Credit Shocks; Roaring Twenties;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. 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). General contact details of provider: http://edirc.repec.org/data/edclbus.html .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.