Real Shock, Monetary Aftershock: The San Francisco Earthquake and the Panic of 1907 / Kerry A. Odell, Marc D. Weidenmier.

Format:

Book

Author/Creator:

Odell, Kerry A.

Contributor:

National Bureau of Economic Research.

Weidenmier, Marc D.

Series:

Working Paper Series (National Bureau of Economic Research) no. w9176.

NBER working paper series no. w9176

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Real Shock, Monetary Aftershock

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2002.

Summary:

Economists have long studied the relationship between the real and monetary sectors. We examine the macroeconomic effects of the 1906 San Francisco earthquake, a shock that immediately reduced United States. GNP by 1.5-1.8 percentage points. The quake's impact manifested itself in gold flows, as British insurance companies paid their San Francisco claims out of home funds in the fall of 1906. The capital outflow prompted the Bank of England to raise interest rates and discriminate against American finance bills. British bank policy pushed the US into recession and set the stage for the 1907 financial crisis. The 1907 panic led to the formation of the National Monetary Commission whose proposals recommended the creation of the Federal Reserve. In this study, we identify the San Francisco earthquake as the shock that triggered the chain of events that culminated in the panic of 1907.

Notes:

Print version record

September 2002.