Inflation expectations and the recovery from the Great Depression in Germany

Volker Daniel and Lucas ter Steege

Explorations in Economic History, 2020, vol. 75, issue C

Abstract: A regime shift toward increased inflation expectations is credited with jump-starting the recovery from the Great Depression in the United States. What role did inflation expectations play in Germany that experienced a similarly successful economic upturn in the 1930s? We study inflation expectations in the German recovery across several methods: we conduct a narrative study of media sources; we estimate inflation expectations from a factor-augmented vector autoregression model, real interest rate forecasts, and quantitative news series. Consistently across these approaches, we do not find a shift to increased expected inflation. This recovery was different, and its causes lie elsewhere.

Keywords: Inflation expectations; Great Depression; Inflation forecasting; Regime change; Germany; Narrative evidence (search for similar items in EconPapers)
JEL-codes: D84 E12 E31 E32 E37 N14 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:exehis:v:75:y:2020:i:c:s0014498318301554

DOI: 10.1016/j.eeh.2019.101305

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