Did Monetary Policy Matter? Narrative Evidence from the Classical Gold Standard

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Abstract

This paper investigates the causal effect of monetary policy on economic activity in the United Kingdom between 1890 and 1913. Based on the Romer and Romer (2004) narrative identification approach, I find that following a one percentage point monetary tightening, unemployment rose by 0.8 percentage points, while inflation fell by 2.7 percentage points. In addition, monetary policy shocks accounted for more than a quarter of macroeconomic volatility.
Original languageEnglish
Place of PublicationLund
PublisherDepartment of Economic History, Lund University
Number of pages34
Publication statusPublished - 2017 Feb 28

Publication series

NameLund Papers in Economic History: General Issues
PublisherDepartment of Economic History, Lund University
No.155
ISSN (Print)1101-346X

Subject classification (UKÄ)

  • Economic History

Free keywords

  • E31
  • E32
  • E52
  • E58
  • N13
  • business cycles
  • gold standard
  • monetary policy
  • narrative identification

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