NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Exits from Recessions: The U.S. Experience 1920-2007

Michael D. Bordo, John Landon-Lane

NBER Working Paper No. 15731
Issued in February 2010
NBER Program(s):   DAE

In this paper we provide some evidence on when central banks have shifted from expansionary to contractionary monetary policy after a recession has ended—the exit strategy. We examine the relationship between the timing of changes in several instruments of monetary policy and the timing of changes of selected real macro aggregates and price level (inflation) variables across U.S. business cycles from 1920-2007. We find, based on historical narratives, descriptive evidence and econometric analysis, that in the 1920s and the 1950s the Fed would generally tighten when the price level turned up. By contrast, since 1960 the Fed has generally tightened when unemployment peaked and this tightening often occurred after inflation began to rise. The Fed is often too late to prevent inflation.

download in pdf format
   (387 K)

email paper

This paper is available as PDF (387 K) or via email.

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w15731

Users who downloaded this paper also downloaded these:
Temin w15645 The Great Recession and the Great Depression
Woodford w15714 Simple Analytics of the Government Expenditure Multiplier
Nekarda and Ramey w15754 Industry Evidence on the Effects of Government Spending
Gali w15871 Monetary Policy and Unemployment
Acharya, Schnabl, and Suarez w15730 Securitization without risk transfer
 
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