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A Heliocentric Journey into Germany's Great Depression

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  • Mark Weder

    ()
    (School of Economics, University of Adelaide)

Abstract

The paper finds empirical evidence on the ripple effect of sunspots on the interwar German economy. It identifies a sequence of negative shocks to expectations for the 1927 to 1932 period. The artificial economy predicts the 1928-1932 depression and a long boom from 1933 onwards. Overall, a tangible fraction of interwar output volatility is attributed to sunspots.

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File URL: http://www.economics.adelaide.edu.au/research/papers/doc/wp2005-13.pdf
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Bibliographic Info

Paper provided by University of Adelaide, School of Economics in its series School of Economics Working Papers with number 2005-13.

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Length: 34 pages
Date of creation: 2005
Date of revision:
Handle: RePEc:adl:wpaper:2005-13

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Postal: Adelaide SA 5005
Phone: (618) 8303 5540
Web page: http://www.economics.adelaide.edu.au/
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Related research

Keywords: sunspots; Great Depression; Germany; Temin (1971);

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References

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  1. Weder, Mark, 2004. "A Heliocentric Journey into Germany's Great Depression," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4191, C.E.P.R. Discussion Papers.
  2. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2004. "A Critique of Structural VARs Using Real Business Cycle Theory," Levine's Bibliography 122247000000000518, UCLA Department of Economics.
  3. Greenwood, Jeremy & Hercowitz, Zvi & Huffman, Gregory W, 1988. "Investment, Capacity Utilization, and the Real Business Cycle," American Economic Review, American Economic Association, American Economic Association, vol. 78(3), pages 402-17, June.
  4. Kamihigashi, Takashi, 1996. "Real business cycles and sunspot fluctuations are observationally equivalent," Journal of Monetary Economics, Elsevier, Elsevier, vol. 37(1), pages 105-117, February.
  5. Salyer, Kevin D. & Sheffrin, Steven M., 1998. "Spotting sunspots: Some evidence in support of models with self-fulfilling prophecies," Journal of Monetary Economics, Elsevier, Elsevier, vol. 42(3), pages 511-523, October.
  6. Neville Francis & Michael T. Owyang & Athena T. Theodorou, 2003. "The use of long-run restrictions for the identification of technology shocks," Working Papers, Federal Reserve Bank of St. Louis 2003-010, Federal Reserve Bank of St. Louis.
  7. Ben S. Bernanke, 1990. "On the predictive power of interest rates and interest rate spreads," New England Economic Review, Federal Reserve Bank of Boston, Federal Reserve Bank of Boston, issue Nov, pages 51-68.
  8. Harrison, Sharon G & Weder, Mark, 2002. "Did Sunspot Forces Cause the Great Depression?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3267, C.E.P.R. Discussion Papers.
  9. Roger E.A. Farmer & Jang Ting Guo, 1992. "Real Business Cycles and the Animal Spirits Hypothesis," UCLA Economics Working Papers, UCLA Department of Economics 680, UCLA Department of Economics.
  10. Benhabib, Jess & Farmer, Roger E.A., 1999. "Indeterminacy and sunspots in macroeconomics," Handbook of Macroeconomics, Elsevier, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 6, pages 387-448 Elsevier.
  11. Jonas D. M. Fisher & Andreas Hornstein, 2001. "The role of real wages, productivity, and fiscal policy in Germany's Great Depression, 1928-37," Working Paper, Federal Reserve Bank of Richmond 01-07, Federal Reserve Bank of Richmond.
  12. Jason Bram & Sydney Ludvigson, 1997. "Does consumer confidence forecast household expenditure?: A sentiment index horse race," Research Paper, Federal Reserve Bank of New York 9708, Federal Reserve Bank of New York.
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  15. Beyer, Andreas & Farmer, Roger E. A., 2003. "On the indeterminacy of determinacy and indeterminacy," Working Paper Series, European Central Bank 0277, European Central Bank.
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  17. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2003. "Accounting for the Great Depression," Quarterly Review, Federal Reserve Bank of Minneapolis, Federal Reserve Bank of Minneapolis, issue Spr, pages 2-8.
  18. Weder, Mark, 2003. "Some Observations on the Great Depression in Germany," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3716, C.E.P.R. Discussion Papers.
  19. Ben S. Bernanke & Martin L. Parkinson, 1990. "Procyclical Labor Productivity and Competing Theories of the Business Cycle: Some Evidence from Interwar U.S. Manufacturing Industries," NBER Working Papers 3503, National Bureau of Economic Research, Inc.
  20. Jonas D. M. Fisher & Andreas Hornstein, 2002. "Data Appendix to The Role of Real Wages, Productivity, and Fiscal Policy in Germany's Great Depression 1928-37," Technical Appendices fisher02, Review of Economic Dynamics.
  21. Susanto Basu & John G. Fernald, 1996. "Returns to scale in U.S. production: estimates and implications," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 546, Board of Governors of the Federal Reserve System (U.S.).
  22. Bresnahan, Timothy F. & Raff, Daniel M. G., 1991. "Intra-Industry Heterogeneity and the Great Depression: The American Motor Vehicles Industry, 1929–1935," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 51(02), pages 317-331, June.
  23. L. Wade, 1988. "Review," Public Choice, Springer, Springer, vol. 58(1), pages 99-100, July.
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  26. Neville Francis & Valerie A. Ramey, 2002. "Is the Technology-Driven Real Business Cycle Hypothesis Dead?," NBER Working Papers 8726, National Bureau of Economic Research, Inc.
  27. Benhabib, Jess & Wen, Yi, 2004. "Indeterminacy, aggregate demand, and the real business cycle," Journal of Monetary Economics, Elsevier, Elsevier, vol. 51(3), pages 503-530, April.
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  29. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2002. "Accounting for the Great Depression (technical appendix)," Working Papers, Federal Reserve Bank of Minneapolis 619, Federal Reserve Bank of Minneapolis.
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Cited by:
  1. Weder, Mark, 2004. "A Heliocentric Journey into Germany's Great Depression," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4191, C.E.P.R. Discussion Papers.

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