Inflation Expectations and Recovery from the Depression in 1933: Evidence from the Narrative Record

Andrew Jalil and Gisela Rua

No 2015-29, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: This paper uses the historical narrative record to determine whether inflation expectations shifted during the second quarter of 1933, precisely as the recovery from the Great Depression took hold. First, by examining the historical news record and the forecasts of contemporary business analysts, we show that inflation expectations increased dramatically. Second, using an event-studies approach, we identify the impact on financial markets of the key events that shifted inflation expectations. Third, we gather new evidence--both quantitative and narrative--that indicates that the shift in inflation expectations played a causal role in stimulating the recovery.

Keywords: Great Depression; inflation expectations; liquidity traps; narrative evidence; regime change (search for similar items in EconPapers)
JEL-codes: E31 E32 E42 N12 (search for similar items in EconPapers)
Pages: 85 pages
Date: 2015-04-22
New Economics Papers: this item is included in nep-cba, nep-his, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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http://www.federalreserve.gov/econresdata/feds/2015/files/2015029pap.pdf Full text (application/pdf)
http://dx.doi.org/10.17016/FEDS.2015.029 http://dx.doi.org/10.17016/FEDS.2015.029 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2015-29

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