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Reassessing the Thesis of the Monetary History

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Abstract

The economic crisis that began in 2007 and still lingers has invited comparison with the Great Depression of the 1930s. It has also generated renewed interest in Milton Friedman and Anna Schwartz’s explanation of the latter as mainly the consequence of the Fed’s failure as a lender of last resort at its onset, and the ineptitude of its policies thereafter. This explanation is reassessed in the light of events since 2007, and it is argued that its plausibility emerges enhanced, even though policy debates in recent years have paid more attention to interest rates and credit markets than to Friedman and Schwartz’s key variable, the quantity of money.

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  • David Laidler, 2013. "Reassessing the Thesis of the Monetary History," University of Western Ontario, Economic Policy Research Institute Working Papers 20135, University of Western Ontario, Economic Policy Research Institute.
    • Handle: RePEc:uwo:epuwoc:20135
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    Cited by:

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    2. Scott Sumner, 2015. "What Would Milton Friedman Have Thought of the Great Recession?," American Journal of Economics and Sociology, Wiley Blackwell, vol. 74(2), pages 209-235, March.
    3. Shehu El-Rasheed & Hussin Abdullah & Jauhari Dahalan, 2017. "Monetary Uncertainty and Demand for Money Stability in Nigeria: An Autoregressive Distributed Lag Approach," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 601-607.
    4. Allan Kayongo & Asumani Guloba, 2018. "Economic Uncertainty and Money Demand Stability in Uganda during Financial Liberalization: A GARCH and ARDL Approach," Applied Economics and Finance, Redfame publishing, vol. 5(4), pages 70-86, July.
    5. Brett Fiebiger & Marc Lavoie, 2020. "Helicopter Ben, Monetarism, The New Keynesian Credit View and Loanable Funds," Journal of Economic Issues, Taylor & Francis Journals, vol. 54(1), pages 77-96, January.
    6. Finn Poschmann, 2014. "Shareholder Liability: A New (Old) Way of Thinking about Financial Regulation," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 401, February.

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    More about this item

    Keywords

    Great Depression; Great Contraction; Great Recession; Keynesianism; Monetarism; Lender of Last Resort; Money; High-powered money; Monetary base; Currency; Bank reserves; Quantitative easing; Open-market operations;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • N2 - Economic History - - Financial Markets and Institutions

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