Inflation Expectations and the Recovery from the Great Depression in Germany

Volker Daniel and Lucas ter Steege

No 6, Working Papers from German Research Foundation's Priority Programme 1859 "Experience and Expectation. Historical Foundations of Economic Behaviour", Humboldt University Berlin

Abstract: A regime shift towards increased inflation expectations is credited with jumpstarting the recovery from the Great Depression in the United States. Germany experienced a recovery as fast and strong in the 1930s. What role did inflation expectations play at the start of this remarkable economic upturn? To answer this question, we study inflation expectations in Germany across two different methods: we conduct a narrative study of media sources and estimate inflation expectations from a FAVAR model. 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: 2018
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Related works:
Journal Article: Inflation expectations and the recovery from the Great Depression in Germany (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:pp1859:6

DOI: 10.18452/19198

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