Lund Papers in Economic History, Department of Economic History, Lund University
Did Monetary Policy Matter? Narrative Evidence from the Classical Gold Standard
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.
Keywords: business cycles; gold standard; monetary policy; narrative identification; (follow links to similar papers)
JEL-Codes: E31; E32; E52; E58; N13; (follow links to similar papers)
34 pages, February 28, 2017
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