Pethokoukis

From the Great Depression to the Great Recession

A great essay by Michael Bordo and Hugh Rockoff on the 50th anniversary of A Monetary History of the United States by Milton Friedman and Anna Schwartz. Definitely worth reading. Here is the NBER abstract:

A Monetary History of the United States 1867 to 1960 published in 1963 was written as part of an extensive NBER research project on Money and Business Cycles started in the 1950s. The project resulted in three more books and many important articles. A Monetary History was designed to provide historical evidence for the modern quantity theory of money. The principal lessons of the modern quantity theory of the long-run neutrality of money, the transitory effects of monetary policy on real economic activity, and the importance of stable money and of monetary rules have all been absorbed in modern macro models.

A Monetary History , unlike the other books, has endured the test of time and has become a classic whose reputation has grown with age. It succeeded because it was based on narrative and not an explicit model. The narrative methodology pioneered by Friedman and Schwartz and the beautifully written story still captures the imaginations of new generations of economists.

2 thoughts on “From the Great Depression to the Great Recession

  1. A Monetary History , unlike the other books, has endured the test of time and has become a classic whose reputation has grown with age. It succeeded because it was based on narrative and not an explicit model. The narrative methodology pioneered by Friedman and Schwartz and the beautifully written story still captures the imaginations of new generations of economists.

    The book is overrated. They missed the fact that the 1920s boom was extended by a reckless expansion of credit in the second half of the decade and that it was that expansion that was the trigger for the Great Depression. I prefer Higgs and Rothbard’s explanations over those of Friedman and Schwartz.

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