The Ends of 27 Big Depressions

Martin Ellison, Sang Seok Lee and Kevin O'Rourke

American Economic Review, 2024, vol. 114, issue 1, 134-68

Abstract: How did countries recover from the Great Depression? In this paper, we explore the argument that leaving the gold standard helped by boosting inflationary expectations, lowering real interest rates, and stimulating interest-sensitive expenditures. We do so for a sample of 27 countries, using modern nowcasting methods and a new dataset containing more than 230,000 monthly and quarterly observations for over 1,500 variables. In those cases where the departure from gold happened on well-defined dates, inflationary expectations clearly rose in the wake of departure. Instrumental variable, difference-in-difference, and synthetic matching techniques suggest that the relationship is causal.

JEL-codes: E31 E32 E42 E43 F30 N10 N20 (search for similar items in EconPapers)
Date: 2024
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Working Paper: The Ends of 27 Big Depressions (2020)
Working Paper: The Ends of 27 Big Depressions (2020)
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DOI: 10.1257/aer.20221479

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