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We thank friends and colleagues for advice and encouragement. Dan Bogart, Michael

By Gary Richardson, William Troost, Jan Brueckner, Charles Calomiris, Ami Glazer and Michelle Garfinkel


The Federal Reserve Act of 1913 divided Mississippi between the 6 th (Atlanta) and 8 th (St. Louis) Federal Reserve Districts. Before and during the Great Depression, these districts ’ policies differed. The Atlanta Fed championed monetary activism and the extension of aid to ailing institutions. The St. Louis Fed adhered to the doctrine of real bills and eschewed expansionary initiatives. During the banking panic in the fall of 1930, the Atlanta Fed expanded credit available to the financial system and expedited lending to banks in need. The St. Louis Fed did not. Outcomes differed across districts. Banks in the 6 th District survived the panic at a rate substantially higher than banks in the 8 th District. The pattern suggests that monetary intervention reduced failure rates during panics. Historical evidence and statistical analysis corroborates this conclusion. Preliminary draft. Please notify authors of citations

Year: 2006
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