Did monetary policy matter? Narrative evidence from the classical gold standard

摘要

This paper investigates the causal effects of monetary policy on the British economy during the classical gold standard. Based on the narrative identification approach, I find that following a one percentage point monetary tightening, unemployment rose by 0.9 percentage points, while inflation fell by 3.1 percentage points. In addition, monetary policy shocks accounted for a third of macroeconomic volatility. Crown Copyright (C) 2017 Published by Elsevier Inc. All rights reserved.