Did Doubling Reserve Requirements Cause the Recession of 1937-1938? A Microeconomic Approach
Charles W. Calomiris,
Joseph R. Mason and
David Wheelock ()
Additional contact information
Charles W. Calomiris: Columbia University
Joseph R. Mason: LA State University
Working Papers from University of Pennsylvania, Wharton School, Weiss Center
In 1936-37, the Federal Reserve doubled the reserve requirements imposed on member banks. Ever since, the question of whether the doubling of reserve requirements increased reserve demand and produced a contraction of money and credit, and thereby helped to cause the recession of 1937-1938, has been a matter of controversy. Using microeconomic data to gauge the fundamental reserve demands of Fed member banks, we find that despite being doubled, reserve requirements were not binding on bank reserve demand in 1936 and 1937, and therefore could not have produced a significant contraction in the money multiplier. To the extent that increases in reserve demand occurred from 1935 to 1937, they reflected fundamental changes in the determinants of reserve demand and not changes in reserve requirements.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed
Downloads: (external link)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://fic.wharton.upenn.edu/fic/papers/11/11-03.pdf [301 Moved Permanently]--> https://fic.wharton.upenn.edu/fic/papers/11/11-03.pdf)
Working Paper: Did doubling reserve requirements cause the recession of 1937-1938? a microeconomic approach (2011)
Working Paper: Did Doubling Reserve Requirements Cause the Recession of 1937-1938? A Microeconomic Approach (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ecl:upafin:11-03
Access Statistics for this paper
More papers in Working Papers from University of Pennsylvania, Wharton School, Weiss Center Contact information at EDIRC.
Bibliographic data for series maintained by ().