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The Ends of 27 Big Depressions

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  • O'Rourke, Kevin
  • Ellison, Martin
  • Lee, Sang Seok

Abstract

How did countries recover from the Great Depression? In this paper we explore the argument that leaving the gold standard helped by boosting inflationary expectations and lowering real interest rates. We do so for a sample of 27 countries, using modern nowcasting methods and a new data set containing more than 230,000 monthly and quarterly observations for over 1, 500 variables. In those cases where the departure from gold happened on clearly defined dates, it seems clear that inflationary expectations rose in the wake of departure. IV, diff-in-diff, and synthetic matching techniques suggest that the relationship is causal.

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  • O'Rourke, Kevin & Ellison, Martin & Lee, Sang Seok, 2020. "The Ends of 27 Big Depressions," CEPR Discussion Papers 15061, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:15061
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    Cited by:

    1. Ronicle, David, 2022. "Turning in the widening gyre: monetary and fiscal policy in interwar Britain," Bank of England working papers 968, Bank of England.

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    More about this item

    Keywords

    Gold standard; Great depression; Inflationary expectations;
    All these keywords.

    JEL classification:

    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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