Losing the Country: Debt, Deflation, and the Rural Rise of the Nazi Party

Thilo Nils Hendrik Albers, Felix Kersting and Monique Reiske
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Thilo Nils Hendrik Albers: HU Berlin
Felix Kersting: HU Berlin
Monique Reiske: HU Berlin

No 511, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: Using interwar German agriculture as a case, this paper explores the political cost of debt deflation which we characterize with farmers' leverage ratios. Primary deficits drove their increase during 1924-1928, but deflation pushed them to unsustainable levels during 1929-1932. We construct corresponding exogenous county-level exposure measures and show their effect on economic distress as well as political radicalization. Our results suggest that debt deflation increased the Nazi party's rural vote share by over 8 percentage points relative to a counterfactual baseline scenario and was thus a necessary condition for its rural dominance and ascension to parliamentary power.

Keywords: great depression; weimar germany; nsdap; extremism; debt deflation; economic crisis (search for similar items in EconPapers)
JEL-codes: D72 N13 N54 (search for similar items in EconPapers)
Date: 2024-09-28
New Economics Papers: this item is included in nep-agr, nep-his, nep-ipr and nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:rco:dpaper:511

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