Abstract

http://ssrn.com/abstract=2325219
 


 



Inflation Expectations and Recovery from the Depression in 1933: Evidence from the Narrative Record


Andrew Jalil


Occidental College

Gisela Rua


Board of Governors of the Federal Reserve System

April 2015


Abstract:     
This paper uses the historical narrative record to determine whether inflation expectations shifted during the second quarter of 1933, precisely as the recovery from the Great Depression took hold. First, by examining the historical news record and the forecasts of contemporary business analysts, we show that inflation expectations increased dramatically. Second, using an event-studies approach, we identify the impact on financial markets of the key events that shifted inflation expectations. Third, we gather new evidence — both quantitative and narrative — that indicates that the shift in inflation expectations played a causal role in stimulating the recovery.

Number of Pages in PDF File: 82

Keywords: inflation expectations, Great Depression, narrative evidence, liquidity trap, regime change

JEL Classification: E31, E32, E42, N12


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Date posted: September 13, 2013 ; Last revised: May 17, 2015

Suggested Citation

Jalil, Andrew and Rua, Gisela, Inflation Expectations and Recovery from the Depression in 1933: Evidence from the Narrative Record (April 2015). Available at SSRN: http://ssrn.com/abstract=2325219 or http://dx.doi.org/10.2139/ssrn.2325219

Contact Information

Andrew Jalil
Occidental College ( email )
1600 Campus Rd
Los Angeles, CA 90041
United States
Gisela Rua (Contact Author)
Board of Governors of the Federal Reserve System ( email )
20th Street and Constitution Avenue NW
Washington, DC 20551
United States
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