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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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Identification Number: 10.1111/ehr.13215


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
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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: 14 Jun 2024 20:48

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