Some Observations on the Great Depression in Germany

Mark Weder

German Economic Review, 2006, vol. 7, issue 1, 113-133

Abstract: This paper evaluates the role of preference shocks during the Great Depression in Germany. From Euler equation residuals, I am able to identify a series of contractionary shocks that struck the German economy from 1929 to 1932. I apply the sequence of these taste innovations to a dynamic general-equilibrium model and find that the size and the order of shocks can generate a pattern that can explain the lion’s share of the decline in economic activity. The artificial economy also predicts a swift recovery after 1932, thereby questioning any significant effects of Nazi economic policy.

Keywords: Demand shocks; Great Depression; Germany (search for similar items in EconPapers)
Date: 2006
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DOI: 10.1111/j.1468-0475.2006.00149.x

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