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The Ends of 27 Big Depressions

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

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.

Suggested Citation

  • Martin Ellison & Sang Seok Lee & Kevin Hjortshøj O'Rourke, 2020. "The Ends of 27 Big Depressions," NBER Working Papers 27586, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:27586
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    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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    JEL classification:

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

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