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Title:Crisis? What crisis? Currency vs. banking in the Financial Crisis of 1931 PDF Logo
Authors:Ritschl, Albrecht
Sarferaz, Samad
Issue Date:2010
Series/Report no.:SFB 649 discussion paper 2010,014
Abstract:This paper examines the role of currency and banking in the German financial crisis of 1931 for both Germany and the U.S. We specify a structural dynamic factor model to identify financial and monetary factors separately for each of the two economies. We find that monetary transmission through the Gold Standard played only a minor role in causing and propagating the crisis, while financial distress was important. We also find evidence of crisis propagation from Germany to the U.S. via the banking channel. Banking distress in both economies was apparently not endogenous to monetary policy. Results confirm Bernanke's (1983) conjecture that an independent, non-monetary financial channel of crisis propagation was operative in the Great Depression.
Subjects:Great Depression
1931 financial crisis
international business cycle transmission
Bayesian factor analysis
currency
banking
JEL:N12
N13
E37
E47
C53
Document Type:Working Paper
Appears in Collections:SFB 649 Discussion Papers, HU Berlin

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