Clark Warburton
Encyclopedia
Clark Warburton was an American economist. He was described as the "first monetarist of the post-World War II period," the most uncompromising upholder of a strictly monetary theory of business fluctuations, and reviver of classic monetary-disequilibrium theory and the quantity theory of money
.
after military service overseas during World War I. From the 1920s to the early 1930s, he held teaching positions in India and the United States. He received a Ph.D.
degree at Columbia University
in 1932. There his interest had shifted from history to economics while attending lectures of Wesley C. Mitchell
. His dissertation was published as The Economic Results of Prohibition. From 1932 to 1934, he worked at the Brookings Institution
. In 1934 he joined the newly-formed Federal Deposit Insurance Corporation
. He subsequently became chief economist there, retiring from that position in 1965. He continued to publish research on substantive and historical monetary economics thereafter.
In the period from 1945, Warburton was a critic of Keynesian theory when the latter was "crowding out interest in money." He made his case in a series of papers, most of them empirical
ly oriented. He compiled and constructed quarterly data for the U.S. in the 1918-47 period, which showed that that deviations in the money supply
and bank reserves from trend preceded in the same direction business-cycle
turning points of successively final output sold, output, prices, and the velocity of money
. He extended such results to 1965 some 20 years later.
In examining longer periods of time (decades) for 1799–1939 and annual data from 1909 to 1947, he found that velocity adjusted for trend and production capacity was relatively stable in peace time, despite extreme monetary volatility and that changes in the quantity of money were the "overwhelmingly dominant factor" responsible for changes in the price level, consistent with the quantity theory of money
.
These findings supported Warburton's contentions that:
In 1966, a collection of 19 of his papers was published.
Quantity theory of money
In monetary economics, the quantity theory of money is the theory that money supply has a direct, proportional relationship with the price level....
.
Life and works
Warburton received bachelor's and master's degrees from Cornell UniversityCornell University
Cornell University is an Ivy League university located in Ithaca, New York, United States. It is a private land-grant university, receiving annual funding from the State of New York for certain educational missions...
after military service overseas during World War I. From the 1920s to the early 1930s, he held teaching positions in India and the United States. He received a Ph.D.
Ph.D.
A Ph.D. is a Doctor of Philosophy, an academic degree.Ph.D. may also refer to:* Ph.D. , a 1980s British group*Piled Higher and Deeper, a web comic strip*PhD: Phantasy Degree, a Korean comic series* PhD Docbook renderer, an XML renderer...
degree at Columbia University
Columbia University
Columbia University in the City of New York is a private, Ivy League university in Manhattan, New York City. Columbia is the oldest institution of higher learning in the state of New York, the fifth oldest in the United States, and one of the country's nine Colonial Colleges founded before the...
in 1932. There his interest had shifted from history to economics while attending lectures of Wesley C. Mitchell
Wesley Clair Mitchell
Wesley Clair Mitchell was an American economist known for his empirical work on business cycles and for guiding the National Bureau of Economic Research in its first decades....
. His dissertation was published as The Economic Results of Prohibition. From 1932 to 1934, he worked at the Brookings Institution
Brookings Institution
The Brookings Institution is a nonprofit public policy organization based in Washington, D.C., in the United States. One of Washington's oldest think tanks, Brookings conducts research and education in the social sciences, primarily in economics, metropolitan policy, governance, foreign policy, and...
. In 1934 he joined the newly-formed Federal Deposit Insurance Corporation
Federal Deposit Insurance Corporation
The Federal Deposit Insurance Corporation is a United States government corporation created by the Glass–Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per bank. , the FDIC insures deposits at...
. He subsequently became chief economist there, retiring from that position in 1965. He continued to publish research on substantive and historical monetary economics thereafter.
In the period from 1945, Warburton was a critic of Keynesian theory when the latter was "crowding out interest in money." He made his case in a series of papers, most of them empirical
Empirical
The word empirical denotes information gained by means of observation or experimentation. Empirical data are data produced by an experiment or observation....
ly oriented. He compiled and constructed quarterly data for the U.S. in the 1918-47 period, which showed that that deviations in the money supply
Money supply
In economics, the money supply or money stock, is the total amount of money available in an economy at a specific time. There are several ways to define "money," but standard measures usually include currency in circulation and demand deposits .Money supply data are recorded and published, usually...
and bank reserves from trend preceded in the same direction business-cycle
Business cycle
The term business cycle refers to economy-wide fluctuations in production or economic activity over several months or years...
turning points of successively final output sold, output, prices, and the velocity of money
Velocity of money
300px|thumb|Similar chart showing the velocity of a broader measure of money that covers M2 plus large institutional deposits, M3. The US no longer publishes official M3 measures, so the chart only runs through 2005....
. He extended such results to 1965 some 20 years later.
In examining longer periods of time (decades) for 1799–1939 and annual data from 1909 to 1947, he found that velocity adjusted for trend and production capacity was relatively stable in peace time, despite extreme monetary volatility and that changes in the quantity of money were the "overwhelmingly dominant factor" responsible for changes in the price level, consistent with the quantity theory of money
Quantity theory of money
In monetary economics, the quantity theory of money is the theory that money supply has a direct, proportional relationship with the price level....
.
These findings supported Warburton's contentions that:
- instability of the money supply was a major source of business fluctuations, including the Great DepressionGreat DepressionThe Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
, not merely an intensifying factor - stability of monetary policyMonetary policyMonetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...
was key to macroeconomic stability.
In 1966, a collection of 19 of his papers was published.
Selected publications
- 1932a, 1968. The Economic Results of Prohibition. AMS Press.Review.
- 1932b. "Prohibition and Economic Welfare," Annals of the American Academy of Political and Social Science, 163, Prohibition: A National Experiment, p p. 89-97
- 1934. (With Maurice Leven and Harold G. Moulton) America's Capacity to Consume, Brookings Institution.
- 1937. "Accounting Methodology in the Measurement of National Income," Studies in Income and Wealth, 1, Pt. 2, pp. 66-110 (press +).
- 1945b. "The Monetary Theory of Deficit Spending," Review of Economics and Statistics, 27(2), p p. 74-84.
- 1945d. "Monetary Policy in the United States in World War II," American Journal of Economics and Sociology, 4(3), p p. 375-383.
- 1948a. "Monetary Velocity and Monetary Policy," Review of Economics and Statistics, 30(4) , p p. 304-314.
- 1949b. "Monetary Policy and Business Forecasting," Journal of Business, 22(2, 3), parts I and II, p p. 71-82, 178-87.
- 1950a. "Monetary Velocity and the Rate of Interest," Review of Economics and Statistics, 32(3), pp. 256–257.
- 1950b. "The Monetary Disequilibrium Hypothesis, The American Journal of Economics and SociologyThe American Journal of Economics and SociologyThe American Journal of Economics and Sociology is a peer-reviewed academic journal established in 1941 by Will Lissner with support from the Robert Schalkenbach Foundation. The purpose of the journal was to create a forum for a continuing discussion of the issues raised by Henry George, a...
, 10(1), p p. 1-11. - 1950c. "Co-Ordination of Monetary, Bank Supervisory, and Loan Agencies of the Federal Government ," Journal of Finance, 5(2), p p. 148-169.
- 1952a. "A Hedge against Inflation," Political Science Quarterly, 67(1) , p p. 1-17.
- 1952b "How Much Variation in the Quantity of Money Is Needed?" Southern Economic Journal, 18(4), p p. 495-509.
- 1953a "Money and Business Fluctuations in the Schumpeterian System," Journal of Political Economy, 61(6), p p. 509-522.
- 1953b "Rules and Implements for Monetary Policy," Journal of Finance, 8(1), p p. 1-21.
- 1958. "Variations in Economic Growth and Banking Developments in the United States From 1835 to 1885," Journal of Economic History, 18(3), p p. 283-297.
- 1965. "Maintaining Prosperity and Achieving Its Equitable Distribution," Southern Economic Journal, 31(4), p p. 289-297. Presidential address of the Southern Economic Association.
- 1981. "Monetary Disequilibrium Theory in the First Half of the Twentieth Century," History of Political Economy, 13(2), p. 285-299.