Abstract

http://ssrn.com/abstract=2325219
 


 



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


Andrew Jalil


Department of Economics, Occidental College

Gisela Rua


Federal Reserve Board

March 2014


Abstract:     
This paper uses the historical narrative record to identify whether inflation expectations shifted during the second quarter of 1933, precisely as the recovery from the Great Depression took hold. The paper has three main findings: (1) inflation expectations changed dramatically during the second quarter of 1933; (2) Roosevelt’s communications strategy, primarily his public commitment to raise prices to pre-depression levels, along with key actions such as abandoning the gold standard, caused the shift in inflation expectations; and (3) monthly output growth increased by 4 to 7 percentage points as a result of the shift in expectations.

Number of Pages in PDF File: 39

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: March 12, 2014

Suggested Citation

Jalil, Andrew and Rua, Gisela, Inflation Expectations and Recovery from the Depression: Evidence from the Narrative Record (March 2014). Available at SSRN: http://ssrn.com/abstract=2325219 or http://dx.doi.org/10.2139/ssrn.2325219

Contact Information

Andrew Jalil
Department of Economics, Occidental College ( email )
No Address Available
Gisela Rua (Contact Author)
Federal Reserve Board ( email )
20th Street and Constitution Avenue NW
Washington, DC 20551
United States
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