Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/201528
Authors: 
Adam, Marc C.
Jansson, Walter
Year of Publication: 
2019
Series/Report no.: 
Diskussionsbeiträge 2019/12
Abstract: 
We evaluate the role played by loan supply shocks in the decline of investment and industrial production during the Great Depression in Germany from 1927 to 1932. We identify loan supply shocks in the context of a time varying parameter vector autoregression with stochastic volatility. Our results indicate that credit constraints were a significant driver of industrial production between 1927 and 1932, supporting the view that a structurally weak banking sector was an important contributor to the German Great Depression. We find further that loan supply shocks were an important driver of investment in the early phase of the depression, between 1927 and 1929, but not between 1930 and 1932. We suggest possible explanations for this puzzle and directions for future research.
Subjects: 
Bayesian
Credit supply
Great Depression
Germany
JEL: 
C11
E32
N14
N24
Persistent Identifier of the first edition: 
Document Type: 
Working Paper
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