Measuring inflation expectations in interwar Britain

Lennard, Jason ORCID: 0000-0002-6700-8969, Meinecke, Finn and Solomou, Solomos (2022) Measuring inflation expectations in interwar Britain. Economic History Review. ISSN 0013-0117

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Abstract

What caused the recovery from the British Great Depression? A leading explanation – the ‘expectations channel’– suggests that a shift in expected inflation lowered realinterest rates and stimulated consumption and invest-ment. However, few studies have measured, or tested theeconomic consequences of, inflation expectations. In thispaper,wecollecthigh-frequencyinformationfromprimaryand secondary sources to measure expected inflation inthe United Kingdom between the wars. A high-frequencyvector autoregression suggests that inflation expectationswere an important source of the early stages of economicrecovery in interwar Britain.

Item Type:	Article
Official URL:	https://onlinelibrary.wiley.com/journal/14680289
Additional Information:	© 2022 The Authors
Divisions:	Economic History
Subjects:	H Social Sciences > HC Economic History and Conditions
JEL classification:	N - Economic History > N1 - Macroeconomics and Monetary Economics; Growth and Fluctuations > N14 - Europe: 1913- E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E30 - General E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy Formation, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E60 - General
Date Deposited:	03 Oct 2022 17:30
Last Modified:	08 Apr 2024 04:03
URI:	http://eprints.lse.ac.uk/id/eprint/116889

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