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Abstract
Drawing from original archival research and utilizing a sequential game framework, this paper contextualizes the Roosevelt administration’s monetary policies during the Great Depression within the context of the “rules versus discretion” (RvD) debate to identify how institutional and political considerations affect Nash Equilibria outcomes. The literature review provides an overview of the following topics: RvD, the role of monetary factors during the Depression, and historical narratives surrounding FDR’s monetary policy. By considering these literatures in tandem, this research postulates through a sequential game that if monetary authorities know private agents possible responses and have the authority to regulate them, as FDR’s administration did, authorities can create Nash Equilibria. Finally, it considers this analysis with relation to Kydland and Prescott’s (1977) findings and offers several points for future discussion, including implications for inequality, political feasibility, and static versus dynamic processes.