Hostname: page-component-cd9895bd7-gbm5v Total loading time: 0 Render date: 2024-12-26T06:56:39.197Z Has data issue: false hasContentIssue false
  • English
  • Français

Interest Rate Controls: The United States in the 1940s

Published online by Cambridge University Press:  03 March 2009

Mark Toma
Mark Toma
Affiliation:
Associate Professor of Economics, University of Kentucky, Lexington, KY 40506.
Get access Rights & Permissions [Opens in a new window]

Abstract

In 1942 the U.S. Treasury and the Federal Reserve agreed to keep the interest rate on long-term government bonds below a ceiling of 2.5 percent. Assuming rational expectations, the ceiling on long-term interest rates can be viewed as a government commitment to low long-run inflation. The Fed also agreed to buy and sell short-term government bonds at a below-market rate of 3/8 percent. This policy did not result in long-run inflation because it was narrowly confined to 3-month Treasury bills.

Type
Articles
Information
The Journal of Economic History , Volume 52 , Issue 3 , September 1992 , pp. 631 - 650
Copyright
Copyright © The Economic History Association 1992

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Barro, Robert, “Interest Rate Targeting,” Journal of Monetary Economics, 23 (01 1989), pp. 3–30.CrossRefGoogle Scholar
Barro, Robert, “The Neoclassical Approach to Fiscal Policy,” in Barro, Robert, ed., Modern Business Cycle Theory (Cambridge, MA, 1989), pp. 178–235.Google Scholar
Benavie, Arthur, and Froyen, Richard, “Price Level Determinancy and Nominal Interest Rate Pegging,” Oxford Economic Papers, 40 (12 1988), pp. 634–45.CrossRefGoogle Scholar
Board of Governors of the Federal Reserve System, Banking and Monetary Statistics, 1941–1970 (Washington, DC, 1976).Google Scholar
Calomiris, Charles, “Price and Exchange Rate Determination during the Greenback Suspension,” Oxford Economic Papers, 40 (12 1988), pp. 719–50.CrossRefGoogle Scholar
Cecchetti, Stephen G., “The Case of the Negative Nominal Interest Rates: New Estimates of the Term Structure of Interest Rates During the Great Depression,” Journal of Political Economy, 96 (12 1988), pp. 1111–41.CrossRefGoogle Scholar
Cover, James P., and Schutte, David P., “The Stability of Money-Supply Policies that Peg the Rate of Interest,” Southern Economic Journal (10 1990), pp. 330–39.CrossRefGoogle Scholar
Davis, George, and Pecquet, Gary, “Interest Rates in the Civil War South,” this Journal, 50 (03 1990), pp. 133–48.CrossRefGoogle Scholar
Eichengreen, Barry, and Garber, Peter, “Before the Accord: U.S. Monetary-Financial Policy 1945–1951” (Working Paper No. 3380, NBER, 06 1990).CrossRefGoogle Scholar
Friedman, Milton, and Schwartz, Anna J., A Monetary History of the United States, 1867–1960 (Princeton, 1963).Google Scholar
Friedman, Milton, and Schwartz, Anna J., Monetary Trends in the United States and the United Kingdom (Chicago, 1982).CrossRefGoogle Scholar
Goodfriend, Marvin, “Interest Rate Smoothing and Price Level Trend-Stationarity,” Journal of Monetary Economics, 19 (05 1987), pp. 335–48.CrossRefGoogle Scholar
Grossman, Herschel, “The Political Economy of War Debt and Inflation,” in Haraf, William and Cagan, Phillip, eds., Monetary Policy for a Changing Financial Environment (Washington, DC, 1990), pp. 166–81.Google Scholar
McCallum, Bennett T., “Some Issues Concerning Interest Rate Pegging, Price Level Determinancy, and the Real Bills Doctrine,” Journal of Monetary Economics, 17 (1986), pp. 135–60.CrossRefGoogle Scholar
Murphy, Henry, The National Debt in War and Transition (New York, 1950).Google Scholar
Rockoff, Hugh, Drastic Measures: A History of Wage and Price Controls in the United States (New York, 1984).CrossRefGoogle Scholar
Toma, Mark, “World War II, Interest Rates and Fiscal Policy Commitments,” Journal of Macroeconomics (Summer 1991), pp. 459–77.CrossRefGoogle Scholar
United States Department of Treasury, Annual Report of the Secretary of the Treasury (Washington, DC).Google Scholar
United States Department of Treasury, Bulletin of the Treasury Department (Washington, DC).Google Scholar
Whittlesey, Charles, The Banking System and War Finance (New York, 1943).Google Scholar
Whittlesey, Charles, Bank Liquidity and the War (New York, 1945).Google Scholar
Wicker, Elmus, “The World War II Policy of Fixing a Pattern of Interest Rates,” Journal of Finance (1969), pp. 447–58.Google Scholar