Abstract: We revisit the Friedman-Schwartz vs. Tobin debate about the Federal Reserve's role in the Great Depression by using modern econometric and quantitative-modeling tools. We calibrate a general equilibrium model with a banking sector and an interbank market, building off Bianchi and Bigio (2022). Our model offers novel contributions to the literature through its banking-focused approach that interconnects money, credit, and output. This framework allows us to leverage aggregate banking data from the era, including interbank rates, to examine the Federal Reserve's policy pass-through into the aggregate economy. The model allows us to weigh the relative importance of various shocks affecting banks and the economy during the period. It is well-suited for conducting counterfactual analyses of policies proposed in Friedman and Schwartz's "A Monetary History of the United States, 1867-1960," particularly an expansion of discount window lending, while accounting for the constraints imposed by the gold standard.

Abstract: Paper provides a comprehensive summary of how private debt lenders are structured, their typical loan and firm profile as well as their performance. It also provides context for the broader corporate lending environment and how private debt compares and has emerged in this environment. Gaining a thorough understanding of the private debt market is key to fully understanding the complete effects of macroprudential bank regulations, changing firm financing behavior and overall macroeconomic stability.