IDEAS home Printed from https://ideas.repec.org/p/cda/wpaper/03-10.html
   My bibliography  Save this paper

THE EFFECT OF CHANGES IN RESERVE REQUIREMENTS DURING THE 1930s:

Author

Listed:
  • Thomas Mayer
  • Thomas F. Cargill

    (Department of Economics, University of California Davis)

Abstract

The differential response of cash reserves of member banks and nonmember banks not subject to the 1936-37 increase in reserve requirements is estimated to determine whether the 1937-38 recession was caused by the increase in reserve requirements. We identify 17 states that maintained constant reserve requirements from June 1934 to June 1941. While member banks increased their cash reserve ratios relative to nonmember banks, the magnitude of the adjustment is too small to have contributed to the 1937-38 recession. Shock prices and public reaction to the increase in reserve requirements are consistent with the empirical results. While the Fed was responsible for the Great Contraction, the results are inconsistent with the view the Fed?s reserve requirement increase contributed significantly to the 1937-38 recession.

Suggested Citation

  • Thomas Mayer & Thomas F. Cargill, 2004. "THE EFFECT OF CHANGES IN RESERVE REQUIREMENTS DURING THE 1930s:," Working Papers 310, University of California, Davis, Department of Economics.
    • Handle: RePEc:cda:wpaper:03-10
    as

    Download full text from publisher

    File URL: http://wp.econ.ucdavis.edu/03-10.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Clifford B. Sowell & Atul K. Saxena, 2000. "An Examination of Country Member Bank Cash Balances of the 1930s: A Test of Alternative Explanations," Southern Economic Journal, Southern Economic Association, vol. 66(4), pages 923-941, April.
    2. Mayer, Thomas, 1978. "Money and the Great Depression: A critique of professor Temin's thesis," Explorations in Economic History, Elsevier, vol. 15(2), pages 127-145, April.
    3. Charles W. Calomiris & Joseph R. Mason, 2003. "Consequences of Bank Distress During the Great Depression," American Economic Review, American Economic Association, vol. 93(3), pages 937-947, June.
    4. Karl Brunner & Allan H. Meltzer, 1968. "Liquidity Traps for Money, Bank Credit, and Interest Rates," Journal of Political Economy, University of Chicago Press, vol. 76, pages 1-1.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    excess reserves; Federal Reserve; Great Depression; reserve requirements; 1937-38;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • 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:cda:wpaper:03-10. 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: (Scott Dyer). General contact details of provider: http://edirc.repec.org/data/educdus.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.

    If CitEc recognized a reference but did not link an item in RePEc 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 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.