Review - Federal Reserve Bank of St. Louis

Lessons Learned? Comparing the Federal Reserve's Responses to the Crises of 1929-1933 and 2007-2009

The financial crisis of 2007-09 is widely viewed as the worst financial disruption since the Great Depression of 1929-33. However, the accompanying economic recession was mild compared with the Great Depression, though severe by postwar standards. Aggressive monetary, fiscal, and financial policies are widely credited with limiting the impact of the recent financial crisis on the broader economy. This article compares the Federal Reserve's responses to the financial crises of 1929-33 and 2007...

Institutions and Government Growth: A Comparison of the 1890s and the 1930s

Statistics on the size and growth of the U.S. federal government, in addition to public statements by President Franklin Roosevelt, seem to indicate that the Great Depression was the primary event that caused the dramatic growth in government spending and intervention in the private sector that continues to the present day. Through a comparison of the economic conditions of the 1890s and the 1930s, the authors argue that post-1930 government growth in the United States is not the direct resul...

Fiscal Multipliers in War and in Peace

Proponents of fiscal stimulus argue that government spending is needed to replace the private spending normally lost during a recession. Estimates of the so-called fiscal multiplier based on wartime episodes are used to support the proposition that a peacetime intervention can "stimulate" the economy in a desirable manner. The author argues that a wartime crisis is fundamentally different from a peacetime economic crisis. What may be desirable in war is not necessarily so in peace. This is de...

Fomc Learning and Productivity Growth (1985-2003): A Reading of the Record

The increasingly rapid productivity growth that began in the 1990s was the defining economic event of the decade and a major topic of debate among Federal Reserve policymakers. A key aspect of the debate was the contrast between information contained in aggregate data, which initially suggested little productivity gain, and anecdotal firm-level evidence, which hinted at the productivity acceleration. The authors revisit this debate from the actual FOMC transcripts. Their study illustrates the...