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Great Spending Crashes

  • David Beckworth EMAIL logo and Josh Hendrickson
Published/Copyright: September 12, 2012
The B.E. Journal of Macroeconomics
From the journal The B.E. Journal of Macroeconomics Volume 12 Issue 1

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.

Keywords: nominal spending; aggregate spending; monetary disequilibrium; monetary shocks; vector autoregression; nominal GDP targeting
Published Online: 2012-9-12

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

Articles in the same Issue

  1. Advances Article
  2. Life Cycle Dynamics of Income Uncertainty and Consumption
  3. Immigration, Fiscal Policy, and Welfare in an Aging Population
  4. Contributions Article
  5. Who Gets the Credit? And Does It Matter? Household vs. Firm Lending Across Countries
  6. How Much Did the 2009 Australian Fiscal Stimulus Boost Demand? Evidence from Household-Reported Spending Effects
  7. Economic Growth and Political Survival
  8. Exchange Rate Uncertainty and Trade
  9. Monetary and Macroprudential Policy Rules in a Model with House Price Booms
  10. A Unified Framework for Using Micro-Data to Compare Dynamic Time-Dependent Price-Setting Models
  11. Government Policy Response to War-Expenditure Shocks
  12. Poverty Traps and Growth in a Model of Endogenous Time Preference
  13. Where Has All the Money Gone? Foreign Aid and the Composition of Government Spending
  14. Great Spending Crashes
  15. Capital Utilization and the Amplification Mechanism
  16. Topics Article
  17. Unemployment Expectations and the Business Cycle
  18. Sector-Specific Capital, Labor Market Distortions and Cross-Country Income Differences: A Two-Sector General Equilibrium Approach
  19. A Dynamic Theory of Competence, Loyalty and Stability in Dictatorships
  20. Coordination Failure in Investment, Economic Growth, and Volatility
  21. Openness, Imported Commodities and the Sacrifice Ratio
  22. Consumption, Leisure and Borrowing Constraints
  23. A Credibility Proxy: Tracking US Monetary Developments
  24. Estimating Information Rigidity Using Firms' Survey Data
  25. Has the Fed Reacted Asymmetrically to Stock Prices?
  26. News Shocks, Productivity and the U.S. Investment Boom-Bust Cycle
  27. A Supply-Demand Framework for Understanding the U.S. Gender Gap in Education
  28. Misallocation and Manufacturing TFP in Bolivia during the Market Liberalization Period
  29. Government Debt Dynamics Under Discretion
  30. The Global Transmission of Government Debt
  31. Is Discretionary Fiscal Policy in Japan Effective?
  32. The Laffer Curve in a Frictional Labor Market
  33. Nonexponential Discounting: A Direct Test And Perhaps A New Puzzle
  34. International Transmission of Medium-Term Technology Cycles: Evidence from Spain as a Recipient Country
  35. Phases of Economic Development: Do Initial Endowments Matter?
https://doi.org/10.1515/1935-1690.2380
Keywords for this article
nominal spending; aggregate spending; monetary disequilibrium; monetary shocks; vector autoregression; nominal GDP targeting

Articles in the same Issue

  1. Advances Article
  2. Life Cycle Dynamics of Income Uncertainty and Consumption
  3. Immigration, Fiscal Policy, and Welfare in an Aging Population
  4. Contributions Article
  5. Who Gets the Credit? And Does It Matter? Household vs. Firm Lending Across Countries
  6. How Much Did the 2009 Australian Fiscal Stimulus Boost Demand? Evidence from Household-Reported Spending Effects
  7. Economic Growth and Political Survival
  8. Exchange Rate Uncertainty and Trade
  9. Monetary and Macroprudential Policy Rules in a Model with House Price Booms
  10. A Unified Framework for Using Micro-Data to Compare Dynamic Time-Dependent Price-Setting Models
  11. Government Policy Response to War-Expenditure Shocks
  12. Poverty Traps and Growth in a Model of Endogenous Time Preference
  13. Where Has All the Money Gone? Foreign Aid and the Composition of Government Spending
  14. Great Spending Crashes
  15. Capital Utilization and the Amplification Mechanism
  16. Topics Article
  17. Unemployment Expectations and the Business Cycle
  18. Sector-Specific Capital, Labor Market Distortions and Cross-Country Income Differences: A Two-Sector General Equilibrium Approach
  19. A Dynamic Theory of Competence, Loyalty and Stability in Dictatorships
  20. Coordination Failure in Investment, Economic Growth, and Volatility
  21. Openness, Imported Commodities and the Sacrifice Ratio
  22. Consumption, Leisure and Borrowing Constraints
  23. A Credibility Proxy: Tracking US Monetary Developments
  24. Estimating Information Rigidity Using Firms' Survey Data
  25. Has the Fed Reacted Asymmetrically to Stock Prices?
  26. News Shocks, Productivity and the U.S. Investment Boom-Bust Cycle
  27. A Supply-Demand Framework for Understanding the U.S. Gender Gap in Education
  28. Misallocation and Manufacturing TFP in Bolivia during the Market Liberalization Period
  29. Government Debt Dynamics Under Discretion
  30. The Global Transmission of Government Debt
  31. Is Discretionary Fiscal Policy in Japan Effective?
  32. The Laffer Curve in a Frictional Labor Market
  33. Nonexponential Discounting: A Direct Test And Perhaps A New Puzzle
  34. International Transmission of Medium-Term Technology Cycles: Evidence from Spain as a Recipient Country
  35. Phases of Economic Development: Do Initial Endowments Matter?
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