Randall E. Parker

Accounting for the great depression: A historical decomposition

Abstract This paper answers two distinct questions. First, To what extent do theories of the Great Depression account for movements in output during 1929:10–1933:12? Second, How much of the Depression could have been avoided if the money stock had grown along its anticipated pre-1929:9 path? The results reveal that an eclectic view of the Depression dominates monocausal explanations. Counterfactual simulations indicate much of the Depression would have been avoided if money growth had been maintained along its pre-Depression path.

Further evidence on the stabilization of postwar economic fluctuations

Abstract Recent work suggests that the NBER used inconsistent methods to date prewar and postwar business cycles. Using Romers (1994) business cycle chronology, we show that the extant evidence in favour of postwar duration stabilization is significantly weakened. The evidence in favor of the no business cycle stabilization null hypothesis is particularly strong when the analysis is restricted to a comparison of the pre-World War I and post-World War II periods.

Federal Debt, Tax-Adjusted q, and Macroeconomic Activity

1. lntroduction Although the role of government debt in the macroeconomy has been intensively analyzed in recent years, there appears to be no theoretical or empirical consensus regarding the impact of government debt on the macroeconomy. The focus of much of this research has been the validity of the Ricardian equivalence hypothesis, and empirical studies have frequently analyzed the impact of government debt on a particular variable like the interest rate, consumption, or output within a singleequation framework. 1 However, since the question of whether government debt is net wealth clearly has implications for a wide range of macroeconomic variables, it would seem appropriate to analyze empirically the effects of government debt within a small macroeconomic model. This is the aim of this study. The framework for the analysis is a ten-variable vector autoregressive (VAR) model, and the effects of federal debt are analyzed through the computation of variance decompositions and impulse response functions.2 This study is distinguished from others by its more comprehensive specification of the financial sector of the model and by the use of a Monte Carlo simulation technique to estimate standard errors for the variance decompositions and impulse response functions. This allows an assessment of the significance of the effects of federal debt on the macroeconomy.

A comparison of two methods for estimating income uncertainty with an application to aggregate consumption behaviour

Econometric theory now provides various techiniques for estimating the variance of a variable for which only a single. Observation is available at each sample point. This paper compares the autoregressive conditional heteroskedastic (ARCH) and linear moment (LM) estimated of the variance of disposable labour income as measures of income uncertainty. Consumer theory postulates a negative relationship between uncertainty about future income and current consumption. Using quarterly post-world war II data with income modelled as a random walk with drift, both ARCH and LM estimates of the variance of income are included in a standard specification of the consumption function. It is found that while noth the ARCH and LM estimates of income uncertainty provide essentially the same predicted reduction in consumption growth as uncertainty increases the LM estimates yield a statistically significant influence on consumption while the ARCH estimated do not. However, both uncertainty measures provide a statistically ...

Some evidence on the influence of income uncertainty on aggregate consumption

Abstract Recent theory suggests uncertainty in income influences consumption expenditures. With disposable income modeled as a random walk plus drift, an econometric technique for estimating the moments of a dependent variable is used to test this hypothesis by producing a series of consistent estimates of the variance of disposable income. Using quarterly post-World War II data and a well-known specification of the consumption function, the standard deviation of income has a negative and statistically significant influence on consumption. The influence of the standard deviation of income on consumption is of the same order of magnitude as that of contemporaneous wealth on consumption.

The seminal works of the Great Depression

The causes and consequences of the Great Depression have been the subject of a vast profusion of literature within the field of macroeconomics. In this timely three-volume collection, Randall Parker brings together the most authoritative works written by some of the leading experts in this field. The first volume gives a comprehensive overview of the build-up and immediate aftermath of the Depression while the second volume provides the reader with detailed analyses of the reasons behind this economic catastrophe. The third volume charts the vital research undertaken on the operation of the interwar gold standard, which has deepened our understanding of the Depression and its international character and concludes with an investigation into the Real Business Cycle approach to the Depression.