The effect of changes in reserve requirements during the 1930s : the evidence from a comparison of member and nonmember banks

摘要

Despite the widespread acceptance of Friedman and Schwartz?s interpretation of the effect of the 1936-37 increase in bank reserve requirements there is surprisingly little straightforward evidence on this issue, perhaps because data limitations and structural instability precludes econometric modeling. We exploit a simple alternative, comparing member banks with nonmember banks not subject to changes in reserve requirements. The one previous study using this procedure made the unwarranted assumption that none of the states changed their reserve requirements. We avoid this assumption by using data from only seventeen states with stable reserve requirements. The results broadly support Friedman and Schwartz.