Review of Austrian Economics - The Ludwig von Mises Institute

More documents

Recommendations

Info

Vedder and Gallaway: The Great Depression of 1946 Table 2 Percent Changes in Key U. S. Economic Indicators, 1944-1947 Indicator 1960 Data 1990 Data Civilian Unemployment Rate Civilian Unemployment (No.) GNP Price Deflator Money GNP Real GNP +200.0% +219.7% 22.6% 11.1% -9.0% +225.0% +244.9% 44.4% 11.3% -22.7% Source: Calculated from data found in table 1 above. Substantial price controls were in effect in 1944, but were essentially abandoned by 1947. Thus official statistics based on controlled prices should tend to understate true equilibrium prices in 1944, and overstate the true inflation at market-clearing prices observed between 1944 and 1947. Yet the statistical revisions have tended to increase the reported inflation from 1944 to 1947, not decrease it. Following from that, the revisions in statistics over time have reduced the reported inflation during World World II. For example, reading the 1990 Economic Report of the President, one learns that the GNP price deflator rose a modest 13.8 percent in the four years 1941 to 1945, a lower annual rate of inflation than prevalent in the past two decades. 7 Yet if one looks at, say, the 1978 Economic Report, the reported 1941-45 inflation is 20.3 percent. 8 A few years earlier, in the 1975 edition of Historical Statistics, the wartime inflation was 26.5 percent. 9 Picking up the 1960 version of Historical Statistics, however, the increase in prices was reported to be 29.7 percent. 10 As time passes, it looks like the government was increasingly successful in curtailing inflation in World War II, and increasingly unsuccessful in containing it in the postwar era. To this point, the various data revisions certainly seem to give justification to a common Austrian suspicion of over-reliance on aggregate economic statistics, particularly price indices, in evaluating 7 1990 Economic Report to the President, p. 298. 8 1978 Economic Report, p. 260. 9 Historical Statistics, p. 224. ^Historical Statistics, p. 139.
8 The Review of Austrian Economics, Vol. 5, No. 2 the economy. Beyond that, the revisions serve to increase reported economic growth during the command economy era of World War II, and reduce it during the era in which there was a return to increased reliance on market forces in resource allocation, a conclusion that Austrians find hard to accept with equanimity Despite our suspicions to the contrary, we must concede, however, that it is possible that the earlier statistics were flawed, and that the revisions have served to paint a more accurate portrayal of the economic history of the period. Perhaps even there really was a major depression in 1946 that no one was perceptive enough to recognize at the time. One way to evaluate that possibility is to try to ascertain what prices would have been in the 1942-48 period if various historical relationships observed earlier held. Using those forecasted or predicted prices, we can then estimate trends in real GNP using the money GNP statistics on which there has been virtually no data revision and little dispute (see, however, below). We developed a model to predict the GNP price deflator for the period 1916 to 1941, the era immediately before the World War II experience where price controls were imposed. The years chosen were dictated largely by data considerations. Four independent variables were chosen, two financial in nature and two proxying for real output. The financial variables were M2 and the interest rate on four- to six-month commercial paper; the "real variables" were ton-miles of class A railroad volume and the total number of employed workers. 11 Ordinary least squares regression procedures were used to estimate the GNP price deflator during the 1916-41 period. Actual values for the four independent variables were used with the estimated regression coefficients and constant term to calculate a forecasted value of the GNP price deflator for 1942 to 1948. The forecasting was aided by the fact that the estimated regression had a relatively good statistical fit (R 2 = .822), with actual and estimated values being rather close for the years immediately preceeding the war. (See the appendix for more details.) Taking the estimated GNP price deflator numbers for 1942-48, along with the accepted money GNP numbers, we calculated real GNP by year. In table 3, we present our estimates, along with the official estimates as they were reported in 1960 and 1990. Turning first to prices, we estimated that true equilibrium prices rose far more during World War II than any of the official estimates. Our estimate All statistics were gathered from the 1975 version of Historical Statistics of the United States, Colonial Times to 1957.
Page 2 and 3:
The Review of Austrian Economics Vo
Page 4 and 5:
The Review of Austrian Economics Vo
Page 6:
Dedication Volume 5, number 1, of t
Page 10:
Articles
Page 13 and 14:
4 The Review of Austrian Economics,
Page 15 and 16:
Page 17 and 18:
Page 19 and 20:
10 The Review of Austrian Economics
Page 21 and 22:
Page 23 and 24:
Page 25 and 26:
Page 27 and 28:
Page 29 and 30:
Page 31 and 32:
Page 33 and 34:
Page 35 and 36:
Page 37 and 38:
Page 39 and 40:
Page 41 and 42:
Page 43 and 44:
Page 45 and 46:
Page 47 and 48:
Page 49 and 50:
Page 51 and 52:
Page 53 and 54:
Page 55 and 56:
Page 57 and 58:
Page 59 and 60:
Page 61 and 62:
Page 63 and 64:
Page 65 and 66:
Page 67 and 68:
Page 69 and 70:
Page 71 and 72:
Page 73 and 74:
Page 76 and 77:
Austrian Capital and Interest Theor
Page 78 and 79:
Endres: Capital and Interest Theory
Page 80 and 81:
Page 82 and 83:
Page 84 and 85:
Page 86 and 87:
Page 88 and 89:
Page 90 and 91:
Page 92 and 93:
Page 94 and 95:
Page 96 and 97:
Page 98 and 99:
Page 100 and 101:
New Classical and Old Austrian Econ
Page 102 and 103:
Garrison: Equilibrium Business Cycl
Page 104 and 105:
Page 106 and 107:
Page 108 and 109:
Page 110 and 111:
Page 112: Garrison: Equilibrium Business Cycl
Page 116 and 117: Marxism, Capitalism and Mercantilis
Page 118 and 119: Review Essay 109 nate private tradi
Page 120 and 121: Review Essay 111 colonists to buy o
Page 122 and 123: Review Essay 113 But, perhaps ironi
Page 124: Book Reviews
Page 127 and 128: 118 The Review of Austrian Economic
Page 148 and 149: The Review of Austrian Economics Vo
Page 150 and 151: The Review of Austrian Economics Vo
Page 152 and 153: Dedication Volume 5, number 2, of t
Page 154: Review of Austrian Economics Volume
Page 158 and 159: The Great Depression of 1946 Richar
Page 160 and 161: Vedder and Gallaway: The Great Depr
Page 186: Vedder and Gallaway: The Great Depr
Page 189 and 190: 34 The Review of Austrian Economics
Page 213 and 214:
Page 215 and 216:
Page 217 and 218:
Page 219 and 220:
Page 221 and 222:
Page 223 and 224:
Page 225 and 226:
Page 227 and 228:
Page 229 and 230:
Page 231 and 232:
Page 233 and 234:
Page 235 and 236:
Page 237 and 238:
Page 239 and 240:
Page 241 and 242:
Page 243 and 244:
Page 245 and 246:
Page 247 and 248:
Page 249 and 250:
Page 251 and 252:
Page 253 and 254:
Page 255 and 256:
100 The Review of Austrian Economic
Page 257 and 258:
Page 259 and 260:
Page 262 and 263:
The Preferred Tax Type: Comment on
Page 264 and 265:
Tabarrok: Preferred Tax Type 109 He
Page 266 and 267:
Comment on Preferred Tax Type: Repl
Page 268 and 269:
Herbener: Comment on Preferred Tax
Page 270 and 271:
Herbener: Comment on Preferred Tax
Page 272:
Book Reviews
Page 275 and 276:
Page 278 and 279:
If You're So Smart: The Narrative o
Page 280 and 281:
Book Reviews 125 But do his own fin
Page 282:
Book Reviews 127 with the Austrian
Page 285 and 286:
Page 287 and 288:
show all

Review of Austrian Economics - The Ludwig von Mises Institute

Create successful ePaper yourself

Delete template?

Save as template?