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Was the Deflation of the Depression Anticipated? An Inference Using Real-time Data

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  • Gabriel Mathy

    (American University)

  • Herman O. Stekler

    (The George Washington University)

Abstract

Theories that explain the behavior of the economy during the Depression are based on assumptions about agents’ expectations about future price trends. This paper uses an alternative methodological approach which utilizes real-time information from the Depression period to infer whether deflation was anticipated. The information includes the forecasting methodology of that time as well as projections about anticipated output that were obtained from the textual analysis of business statements, converting qualitative to quantitative data. We infer that deflation was not anticipated because agents did not expect economic output to consistently decrease.

Suggested Citation

  • Gabriel Mathy & Herman O. Stekler, 2017. "Was the Deflation of the Depression Anticipated? An Inference Using Real-time Data," Working Papers 2017-004, The George Washington University, Department of Economics, H. O. Stekler Research Program on Forecasting.
    • Handle: RePEc:gwc:wpaper:2017-004
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    References listed on IDEAS

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    12. Stekler, Herman & Symington, Hilary, 2016. "Evaluating qualitative forecasts: The FOMC minutes, 2006–2010," International Journal of Forecasting, Elsevier, vol. 32(2), pages 559-570.
    13. Ericsson, Neil R., 2016. "Eliciting GDP forecasts from the FOMC’s minutes around the financial crisis," International Journal of Forecasting, Elsevier, vol. 32(2), pages 571-583.
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    2. Karsten Müller, 2022. "German forecasters’ narratives: How informative are German business cycle forecast reports?," Empirical Economics, Springer, vol. 62(5), pages 2373-2415, May.
    3. Jones, Jacob T. & Sinclair, Tara M. & Stekler, Herman O., 2020. "A textual analysis of Bank of England growth forecasts," International Journal of Forecasting, Elsevier, vol. 36(4), pages 1478-1487.
    4. Thies Clifford F., 2021. "Expectations of a Post-Wwii Depression," Studia Historiae Oeconomicae, Sciendo, vol. 39(1), pages 145-162, December.

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