Measuring inflation expectations in interwar Britain

Jason Lennard, Finn Meinecke and Solomos Solomou

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: What caused the recovery from the British Great Depression? A leading explanation – the ‘expectations channel’– suggests that a shift in expected inflation lowered realinterest rates and stimulated consumption and invest-ment. However, few studies have measured, or tested theeconomic consequences of, inflation expectations. In thispaper,wecollecthigh-frequencyinformationfromprimaryand secondary sources to measure expected inflation inthe United Kingdom between the wars. A high-frequencyvector autoregression suggests that inflation expectationswere an important source of the early stages of economicrecovery in interwar Britain.

Keywords: Great depression; inflation; expectations; interwar Britain; regime change; Great Depression; inflation expectations (search for similar items in EconPapers)
JEL-codes: E30 E60 N14 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2022-10-24
New Economics Papers: this item is included in nep-his and nep-mon
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Citations: View citations in EconPapers (1)

Published in Economic History Review, 24, October, 2022. ISSN: 0013-0117

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http://eprints.lse.ac.uk/116889/ Open access version. (application/pdf)

Related works:
Journal Article: Measuring inflation expectations in interwar Britain (2023)
Working Paper: Measuring Inflation Expectations in Interwar Britain (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:116889

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