The role of real wages, productivity, and fiscal policy in Germany's Great Depression, 1928-37
AbstractWe study the behavior of output, employment, consumption, and investment in Germany during the Great Depression of 1928-37. In this time period, real wages were countercyclical, and productivity and fiscal policy was procyclical. We use the neoclassical growth model to investigate how much these factors contribute to the depression. We find that real wages, which were significantly above their market clearing levels, were the most important factor for the economic decline in the depression. Changes in productivity and fiscal policy were also important for the decline and recovery. Even though our analysis is limited to a small number of factors, the model accounts surprisingly well for the Depression in Germany.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Federal Reserve Bank of Richmond in its series Working Paper with number 01-07.
Date of creation: 2001
Date of revision:
Other versions of this item:
- Jonas D.M. Fisher & Andreas Hornstein, 2002. "The Role of Real Wages, Productivity, and Fiscal Policy in Germany's Great Depression 1928-37," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(1), pages 100-127, January.
- E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-02-10 (All new papers)
- NEP-LAB-2002-02-15 (Labour Economics)
- NEP-PKE-2002-02-15 (Post Keynesian Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Craig Burnside & Martin Eichenbaum & Jonas D.M. Fisher, 2000.
"Assessing the Effects of Fiscal Shocks,"
NBER Working Papers
7459, National Bureau of Economic Research, Inc.
- Jonas Fisher, 2000. "Assessing the Effects of Fiscal Shocks," Econometric Society World Congress 2000 Contributed Papers 1499, Econometric Society.
- Craig Burnside & Martin Eichenbaum & Jonas D.M. Fisher, 1999. "Assessing the effects of fiscal shocks," Working Paper Series WP-99-18, Federal Reserve Bank of Chicago.
- Harold L. Cole & Lee E. Ohanian, 1999. "The Great Depression in the United States from a neoclassical perspective," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 2-24.
- Mark Weder, 2004.
"A Heliocentric Journey into Germany's Great Depression,"
Money Macro and Finance (MMF) Research Group Conference 2004
53, Money Macro and Finance Research Group.
- Mark Weder, 2006. "A heliocentric journey into Germany's Great Depression," Oxford Economic Papers, Oxford University Press, vol. 58(2), pages 288-316, April.
- Mark Weder, 2005. "A Heliocentric Journey into Germany's Great Depression," Economic History 0510002, EconWPA.
- Mark Weder, 2005. "A Heliocentric Journey into Germany's Great Depression," School of Economics Working Papers 2005-13, University of Adelaide, School of Economics.
- Weder, Mark, 2003. "A Heliocentric Journey into Germany´s Great Depression," SFB 373 Discussion Papers 2003,50, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Weder, Mark, 2004. "A Heliocentric Journey into Germany's Great Depression," CEPR Discussion Papers 4191, C.E.P.R. Discussion Papers.
- Weder, Mark, 2003.
"Some Observations on the Great Depression in Germany,"
CEPR Discussion Papers
3716, C.E.P.R. Discussion Papers.
- Mark Weder, 2006. "Some Observations on the Great Depression in Germany," German Economic Review, Verein für Socialpolitik, vol. 7, pages 113-133, 02.
- Albrecht Ritschl & Tobias Straumann, 2009. "Business cycles and economic policy, 1914-1945: a survey," Economic History Working Papers 22402, London School of Economics and Political Science, Department of Economic History.
- Harold L. Cole & Lee E. Ohanian, 2013. "The Impact of Cartelization, Money, and Productivity Shocks on the International Great Depression," NBER Working Papers 18823, National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (William Perkins).
If references are entirely missing, you can add them using this form.