Two Crises, Two Ideas and One Question

David Laidler

No 20124, University of Western Ontario, Economic Policy Research Institute Working Papers from University of Western Ontario, Economic Policy Research Institute

Abstract: Specific ideas about the Fisher relation between real and nominal interest rates and more general ideas about the nature of the central bank's duty to support the financial system in times of crisis were important to the Monetarist re-assessment of the causes of the Great Depression and what this event implied about the inherent stability of the market economy. Aspects of the evolution of these ideas since the Depression and the role that they have played in recent debates about the Great Recession are discussed, and some tentative conclusions about the validity of Monetarist ideas are drawn.

Keywords: Great Depression; Great Recession; Fisher relation; interest rate; monetary policy; central bank; lender of last resort; quantitative easing; money supply; deflation; inflation; monetarism; economic stability (search for similar items in EconPapers)
JEL-codes: B22 E44 E58 E65 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-his, nep-hpe and nep-mon
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Citations: View citations in EconPapers (2)

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