Quantitative Easing in the 1930s

Christopher Hanes

Journal of Money, Credit and Banking, 2019, vol. 51, issue 5, 1169-1207

Abstract: During the 1934–39 recovery from the U.S. Great Depression, overnight interest rates were usually at a lower bound. Meanwhile, American monetary authorities followed policies related to today's debates on quantitative easing: they tried to stabilize yields on Treasury bonds with open market operations; they created rapid growth in high‐powered money; and they allowed transitory factors to affect high‐powered money. Effects of these policies on bond yields reveal a portfolio effect of short‐duration asset supply on term premiums. This portfolio effect helps explain why high‐powered money growth was associated with recovery of real activity over 1934–39.

Date: 2019
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https://doi.org/10.1111/jmcb.12589

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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:51:y:2019:i:5:p:1169-1207

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