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Uncertainty and the Great Slump

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  • Lennard, Jason

Abstract

This article investigates the impact of economic policy uncertainty on the British interwar economy. The first type of evidence examined is qualitative. The historical record shows that contemporaries regularly reported the incidence and consequences of major uncertainty shocks. The second type of evidence analysed is quantitative. Based on a new index of economic policy uncertainty constructed from newspapers and vector autoregressions, the results suggest that uncertainty was an important source of economic fluctuations in Britain between the wars.

Suggested Citation

  • Lennard, Jason, 2020. "Uncertainty and the Great Slump," LSE Research Online Documents on Economics 106638, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:106638
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    File URL: https://researchonline.lse.ac.uk/id/eprint/106638/
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    Cited by:

    1. Jason Lennard, 2023. "Sticky wages and the Great Depression: evidence from the United Kingdom," European Review of Economic History, European Historical Economics Society, vol. 27(2), pages 196-222.
    2. Chanelle Duley & Prasanna Gai, 2020. "When the penny doesn't drop - Macroeconomic tail risk and currency crises," National Institute of Economic and Social Research (NIESR) Discussion Papers 520, National Institute of Economic and Social Research.
    3. Schneider, Benjamin & Vipond, Hillary, 2023. "The past and future of work: how history can inform the age of automation," LSE Research Online Documents on Economics 119282, London School of Economics and Political Science, LSE Library.
    4. Jason Lennard, 2023. "Sticky wages and the Great Depression: evidence from the United Kingdom," European Review of Economic History, European Historical Economics Society, vol. 27(2), pages 196-222.
    5. James Cloyne & Nicholas Dimsdale & Natacha Postel-Vinay, 2024. "Taxes and Growth: New Narrative Evidence from Interwar Britain," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(4), pages 2168-2200.
    6. Christou, Christina & Gabauer, David & Gupta, Rangan, 2020. "Time-Varying impact of uncertainty shocks on macroeconomic variables of the united kingdom: Evidence from over 150 years of monthly data," Finance Research Letters, Elsevier, vol. 37(C).
    7. Ali Kabiri & Harold James & John Landon-Lane & David Tuckett & Rickard Nyman, 2020. "The Role of Sentiment in the Economy: 1920 to 1934," CESifo Working Paper Series 8336, CESifo.
    8. Lennard, Jason & Kenny, Seán & Horgan, Emma, 2023. "Banks and the Economy: Evidence from the Irish Bank Strike of 1966," CEPR Discussion Papers 18711, C.E.P.R. Discussion Papers.
    9. David Ronicle, 2022. "Turning in the widening gyre: monetary and fiscal policy in interwar Britain," Bank of England working papers 968, Bank of England.
    10. Jason Lennard & Finn Meinecke & Solomos Solomou, 2023. "Measuring inflation expectations in interwar Britain," Economic History Review, Economic History Society, vol. 76(3), pages 844-870, August.
    11. Benjamin Schneider & Hillary Vipond, 2023. "The Past and Future of Work: How History Can Inform the Age of Automation," CESifo Working Paper Series 10766, CESifo.
    12. Brian D. Varian, 2022. "Review of periodical literature for 2020: (v) 1850–1945," Economic History Review, Economic History Society, vol. 75(1), pages 263-275, February.
    13. Schneider, Benjamin & Vipond, Hillary, 2023. "The past and future of work: how history can inform the age of automation," Economic History Working Papers 119282, London School of Economics and Political Science, Department of Economic History.
    14. Schläger, Dan, 2024. "Unmasking the significance of uncertainty a case study of the German interwar economy (1919-1935)," LSE Research Online Documents on Economics 125837, London School of Economics and Political Science, LSE Library.
    15. Carlson, Mark, 2025. "Durable consumption, bank distress, economic concerns, and how they interacted during the great depression," Explorations in Economic History, Elsevier, vol. 97(C).
    16. Lennard, Jason & Paker, Meredith, 2023. "Devaluation, Exports, and Recovery from the Great Depression," CEPR Discussion Papers 18702, C.E.P.R. Discussion Papers.
    17. Gabriel P. Mathy, 2020. "How much did uncertainty shocks matter in the Great Depression?," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 14(2), pages 283-323, May.
    18. Chanelle Duley & Prasanna Gai, 2023. "Macroeconomic tail risk, currency crises and the inter‐war gold standard," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(4), pages 1551-1582, November.

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    JEL classification:

    • N0 - Economic History - - General

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