Paper #333

Títol:

Inflationary expectations during Germany's great slump

Autor:

Hans Joachim Voth

Data:

Novembre 1998

Resum:

Was the German slump inevitable? This paper argues that -despite the speed and depth of Germany's deflation in the early 1930s - fear of inflation is evident in the bond, foreign exchange, and commodity markets at certain critical junctures of the Great Depression. Therefore, policy options were more limited than many subsequent critics of Br�ning's policies have been prepared to admit. Using a rational expectations framework, we find strong evidence from the bond market to suggest fear of inflation. Futures prices also reveal that market participants were betting on price increases. These findings are discussed in the context of reparations and related to the need for a regime shift to overcome the crisis.

Paraules clau:

Inflation, great depression, rational expectations, uncertainty, monetary policy

Codis JEL:

E31, E43, E44, N14, N24

Àrea de Recerca:

Història Econòmica i de l'Empresa

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