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Some Observations on the Great Depression in Germany

  • Mark Weder

This paper evaluates the role of preference shocks during the Great Depression in Germany. From Euler equation residuals, I am able to identify a series of contractionary shocks that struck the German economy from 1929 to 1932. I apply the sequence of these taste innovations to a dynamic general-equilibrium model and find that the size and the order of shocks can generate a pattern that can explain the lion's share of the decline in economic activity. The artificial economy also predicts a swift recovery after 1932, thereby questioning any significant effects of Nazi economic policy. Copyright Verein für Socialpolitik and Blackwell Publishing Ltd. 2006.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0475.2006.00149.x
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Article provided by Verein für Socialpolitik in its journal German Economic Review.

Volume (Year): 7 (2006)
Issue (Month): (02)
Pages: 113-133

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Handle: RePEc:bla:germec:v:7:y:2006:i::p:113-133
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