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Licensed Unlicensed Requires Authentication Published by De Gruyter September 12, 2012

Great Spending Crashes

David Beckworth and Josh Hendrickson

Abstract

Over the last century, there have been four major peacetime crashes in aggregate nominal spending in the United States. We argue in this paper that these great spending crashes can be best understood from a monetary disequilibrium perspective. We examine this hypothesis using a structural vector autoregression that identifies the key monetary shocks implied by the monetary disequilibrium view. We find that these monetary shocks are the main contributors to each of the great spending crashes.

Published Online: 2012-9-12

©2012 Walter de Gruyter GmbH & Co. KG, Berlin/Boston

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