Deficit Spending in the Nazi Recovery, 1933-1938: A Critical Reassessment

Zurich IEER Working Paper No. 68

38 Pages Posted: 9 Mar 2001

See all articles by Albrecht Ritschl

Albrecht Ritschl

London School of Economics & Political Science (LSE) - Department of Economic History; Centre for Economic Policy Research (CEPR)

Date Written: December 2000

Abstract

This paper examines the effects of deficits spending and work-creation on the Nazi recovery. Although deficits were substantial and full employment was reached within four years, archival data on public deficits suggest that their fiscal impulse was too small to account for the speed of recovery. VAR forecasts of output using fiscal and monetary policy instruments also suggest only a minor role for active policy during the recovery. Nazi policies deliberately crowded out private demand to ensure high rates of rearmament. Military spending dominated civilian work-creation already in 1934. Investment in autobahn construction was minimal during the recovery and gained momentum only in 1936 when full employment was approaching. Continued fiscal and monetary expansion after that date may have prevented the economy from sliding back into recession. We find some effects of the Four Years Plan of late 1936, which boosted government spending further and tightened public control over the economy.

Keywords: Nazi Recovery, Deficit Spending, Work-Creation, War Preparation, VAR Forecasts

JEL Classification: N44, N14, E52, E47, E65, E27

Suggested Citation

Ritschl, Albrecht, Deficit Spending in the Nazi Recovery, 1933-1938: A Critical Reassessment (December 2000). Zurich IEER Working Paper No. 68. Available at SSRN: https://ssrn.com/abstract=259264 or http://dx.doi.org/10.2139/ssrn.259264

Albrecht Ritschl (Contact Author)

London School of Economics & Political Science (LSE) - Department of Economic History ( email )

Houghton Street
London WC2A 2AE
United Kingdom

HOME PAGE: http://personal.lse.ac.uk/ritschl/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
442
Abstract Views
3,541
rank
66,161
PlumX Metrics