Inflation expectations and recovery in spring 1933

Andrew J. Jalil and Gisela Rua

Explorations in Economic History, 2016, vol. 62, issue C, 26-50

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-study approach, we identify the effect of the key events that shifted inflation expectations on financial markets. 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: E31; E32; E12; N42; Inflation expectations; Great Depression; Narrative evidence; Liquidity trap; Regime change (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:exehis:v:62:y:2016:i:c:p:26-50

DOI: 10.1016/j.eeh.2016.07.001

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