Spoils of War: The Political Legacy of the German hyperinflation

Gregori Galofré-Vilà

Explorations in Economic History, 2023, vol. 88, issue C

Abstract: I study the link between monetary policy and electoral outcomes by linking new data on the 1923 German hyperinflation and the vote share of the main parties of Weimar Republic from 1924 to 1933. Exploiting cross-sectional variation in prices in over 280 cities, I find that inflation predicts the vote share of the Volksrechtspartei, an association-turned-party of inflation victims, and positively correlates with the Communists in the 1932 elections. Hyperinflation also leads to a decline in turnout, with a loss of confidence in the German institutions. However, contrary to received wisdom, areas more affected by inflation did not see a higher vote share for the Nazi party. Results are robust to a range of specifications, including models in differences, panel data with fixed effects, Coarsened Exact Matching estimation, Conley standard errors, and an instrumental variable strategy.

Keywords: Hyperinflation; Monetary policy; Populism; Nazis (search for similar items in EconPapers)
JEL-codes: D7 D72 N14 N34 N44 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:exehis:v:88:y:2023:i:c:s0014498322000572

DOI: 10.1016/j.eeh.2022.101479

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