Returning to growth: lessons from the 1930s

Nicholas Crafts

No 13010, Working Papers from Economic History Society

Abstract: "This paper reviews 1930s’ UK experience focusing on the recovery phase. This was initially based on a ‘cheap money’ policy which reduced real interest rates when nominal rates were close to zero and fiscal consolidation was in full swing. Unfortunately, microeconomic policies to raise prices had adverse effects on competition and productivity performance suffered. Fiscal stimulus from rearmament boosted growth significantly after 1935 but the multiplier was low. Key policy implications for today are the current UK inflation-targeting regime may need to be reconsidered and that it may be optimistic to expect a ‘plan B’ to provide a major stimulus."

Keywords: cheap money; inflation-targeting; fiscal stimulus; productivity; rearmament (search for similar items in EconPapers)
JEL-codes: E65 N14 (search for similar items in EconPapers)
Date: 2013-04
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Citations: View citations in EconPapers (1)

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