Paper #535

Title:

Inflation, political instability and stockmarket volatility in interwar Germany

Author:

Hans Joachim Voth

Date:

March 2001

Abstract:

What determined the volatility of asset prices in Germany between the wars? This paper argues that the influence of political factors has been overstated. The majority of events increasing political uncertainty had little or no effect on the value of German assets and the volatility of returns on them. Instead, it was inflation (and the fear of it) that is largely responsible for most of the variability in asset returns.

Keywords:

Inflation, stock returns, volatility of asset returns, political uncertainty, Germany (interwar)

JEL codes:

G14, G15, E44, E31, N14, N24

Area of Research:

Economic and Business History

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