Abstract

I explore the timing of and effects of the U.S. financial crisis of the 1930s in a regime switching framework. Estimated conditional probabilities over the state of the financial sector suggest that a prolonged period of crisis begins not with the 1929 stock market crash, but with the first banking panic of October 1930. These probabilities also suggest that the crisis persists until the introduction of federal deposit insurance in early 1934. Consistent with the view that this financial crisis had real effects, these conditional probabilities contain additional explanatory power for output fluctuations. This is in addition to that provided by the money stock.

pdf

Additional Information

ISSN
1538-4616
Print ISSN
0022-2879
Pages
pp. 76-93
Launched on MUSE
2002-02-01
Open Access
No
Archive Status
Archived 2007
Back To Top

This website uses cookies to ensure you get the best experience on our website. Without cookies your experience may not be seamless.