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Economic stagnation in Weimar Germany: A structuralist perspective

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  • Block, Thorsten

    (MERIT)

Abstract

Mexico and Argentina in the 1990s as well as Weimar Germany in the 1920s implemented similar exchange-rate-based stabilization programs which were successful in stopping inflation, but failed to generate the domestic savings and investment rates necessary for a sustainable growth path. It is argued that in both cases substantial foreign capital inflows were attracted by a stable nominal exchange rate and high interest rates, which alleviated the distributional struggle driving high inflation. However, this incentive structure caused a profit squeeze in the tradable goods sector due to an appreciating real exchange rate precipitating the ultimate collapse of the programs.

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  • Block, Thorsten, 2001. "Economic stagnation in Weimar Germany: A structuralist perspective," Research Memorandum 025, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:umamer:2001025
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    File URL: https://www.merit.unu.edu/publications/rmpdf/2001/rm2001-025.pdf
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    References listed on IDEAS

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