Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/248970 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 9425
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
What caused the recovery from the British Great Depression? A leading explanation - the “expectations channel” - suggests that a shift in expected inflation lowered real interest rates and stimulated consumption and investment. However, few studies have measured, or tested the economic consequences of, inflation expectations. In this paper, we collect high-frequency information from primary and secondary sources to measure expected inflation in the United Kingdom between the wars. A VAR model suggests that inflation expectations were an important source of the early stages of economic recovery in interwar Britain.
Subjects: 
policy regime change
economic history
Great Depression
JEL: 
E30
E60
N14
Document Type: 
Working Paper
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