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dc.contributor.authorEggertsson, Gauti B.en_US
dc.date.accessioned2012-08-17T14:28:19Z-
dc.date.available2012-08-17T14:28:19Z-
dc.date.issued2006en_US
dc.identifier.urihttp://hdl.handle.net/10419/60658-
dc.description.abstractCan government policies that increase the monopoly power of firms and the militancy of unions increase output? This paper studies this question in a dynamic general equilibrium model with nominal frictions and shows that these policies are expansionary when certain “emergency” conditions apply. I argue that these emergency conditions— zero interest rates and deflation—were satisfied during the Great Depression in the United States. Therefore, the New Deal, which facilitated monopolies and union militancy, was expansionary, according to the model. This conclusion is contrary to the one reached by Cole and Ohanian (2004), who argue that the New Deal was contractionary. The main reason for this divergence is that the current model incorporates nominal frictions so that inflation expectations play a central role in the analysis. The New Deal has a strong effect on inflation expectations in the model, changing excessive deflation to modest inflation, thereby lowering real interest rates and stimulating spending.en_US
dc.language.isoengen_US
dc.publisherFederal Reserve Bank of New York New York, NYen_US
dc.relation.ispartofseriesStaff Report, Federal Reserve Bank of New York 264en_US
dc.subject.jelE52en_US
dc.subject.jelE62en_US
dc.subject.jelE65en_US
dc.subject.jelN12en_US
dc.subject.ddc330en_US
dc.subject.keywordGreat Depression, New Deal, National Industrial Recovery Act, zero interest rates, deflationen_US
dc.subject.stwMarktmachten_US
dc.subject.stwMonopolen_US
dc.subject.stwGewerkschaften_US
dc.subject.stwDynamisches Gleichgewichten_US
dc.subject.stwWirtschaftspolitiken_US
dc.subject.stwWirtschaftskriseen_US
dc.subject.stwUSAen_US
dc.subject.stwVerhandlungsmachten_US
dc.titleWas the New Deal contractionary?en_US
dc.typeWorking Paperen_US
dc.identifier.ppn522100546en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:Staff Reports, Federal Reserve Bank of New York

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