NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Monetary Policy and Regional Interest Rates in the United States, 1880-2002

John Landon-Lane, Hugh Rockoff

NBER Working Paper No. 10924
Issued in November 2004
NBER Program(s):   DAE   ME

The long running debate among economic historians over how long it took regional financial markets in the United States to become fully integrated should be of considerable interest to students of monetary unions. This paper reviews the debate, discusses the implications of various hypotheses for the optimality of the US monetary union, and presents some new findings on the origin and diffusion of monetary shocks. It appears that financial markets were integrated in the late nineteenth and early twentieth centuries in the sense that monetary shocks were routinely transmitted from one part of the United States to another. In particular, shocks to interest rates in the eastern financial centers were routinely transmitted to the periphery. However, it also appears that during this period significant shocks to bank lending rates in the periphery often arose on the periphery itself. This suggests that a nineteenth century monetary authority that relied on operations confined to eastern financial centers would have had a difficult time managing the U.S. monetary union. After World War II the problem of eruptions on the periphery declined.

download in pdf format
   (443 K)

email paper

This paper is available as PDF (443 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w10924

Users who downloaded this paper also downloaded these:
Bodenhorn and Rockoff Regional Interest Rates in Antebellum America
Rockoff h0124 How Long Did It Take the United States to Become an Optimal Currency Area?
Rockoff w9522 Deflation, Silent Runs, and Bank Holidays, in the Great Contraction
Rockoff w12666 On the Origins of "A Monetary History"
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us