Discussion Paper Details

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Title: Some Observations on the Great Depression in Germany

Author(s): Mark Weder

Publication Date: January 2003

Keyword(s): applied dynamic General Equilibrium, demand shocks, germany and great depression

Programme Area(s): International Macroeconomics

Abstract: This Paper evaluates the role of the demand side during the Great Depression in Germany. From Euler equation residuals we are able to identify a series of contractionary demand shocks that pounded the German economy from 1929-32. We apply the detrimental preference innovations to a dynamic general equilibrium model and find that size and order of shocks can generate a pattern that can explain the lion?s share of the decline in economic activity. The artificial economy also predicts a swift recovery after 1932, thereby questioning significant effects of Nazi economic policy.

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Bibliographic Reference

Weder, M. 2003. 'Some Observations on the Great Depression in Germany'. London, Centre for Economic Policy Research.