NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Gabriel P. Mathy

Department of Economics
American University
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Washington, DC 20016
Tel: 202-885-3708

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NBER Working Papers and Publications

September 2017How was the Quantitative Easing Program of the 1930s Unwound?
with Matthew Jaremski: w23788
Outside of the recent past, excess reserves have only concerned policymakers in one other period: the Great Depression. The data show that excess reserves in the 1930s were never actively unwound through a reduction in the monetary base. Nominal economic growth swelled required reserves while an exogenous reduction in monetary gold inflows due to war embargoes in Europe allowed excess reserves to naturally decline towards zero. Excess reserves fell rapidly in early 1941 and would have unwound fully even without the entry of the United States into World War II. As such, policy tightening was at no point necessary and could have contributed to the 1937-1938 Recession.
April 2011Trade, Exchange Rate Regimes and Output Co-Movement: Evidence from the Great Depression
with Christopher M. Meissner: w16925
A large body of cross-country empirical evidence identifies monetary policy and trade integration as key determinants of business cycle co-movement. Partially consistent with this, many argue that the re-emergence of the gold standard allowed for the global transmission of a deflationary shock in 1929 that culminated in the Great Depression. It is puzzling then to see decreased co-movement between 1920 and 1927 when international integration increased and nations returned to the gold standard. Fixed exchange rates and global trade were also on the rise after 1932, but co-movement declined again. Our empirical results shows that exchange rate regimes and trade were associated with higher co-movement at the bilateral level while common shocks and exchange control policies also mattered. Muc...

Published: Business Cycle Co-Movement: Evidence from the Great Depression (2011) Journal of Monetary Economics. 58 (4) pp. 362-372. (with Gabe Mathy)

 
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