Exits from Recessions: The U.S. Experience 1920-2007 / Michael D. Bordo, John Landon-Lane.

Format:

Book

Author/Creator:

Bordo, Michael D.

Contributor:

National Bureau of Economic Research.

Landon-Lane, John.

Series:

Working Paper Series (National Bureau of Economic Research) no. w15731.

NBER working paper series no. w15731

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Exits from Recessions

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2010.

Summary:

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.

Notes:

Print version record

February 2010.