Measuring Inflation Expectations in Interwar Britain

Jason Lennard, Finn Meinecke, Solomos Solomou

Research output: Contribution to journalArticlepeer-review

Abstract

What caused the recovery from the British Great Depression? A leading explanation – the ‘expectations channel’ – suggests that a shift in expected inflation lowered real interest rates and stimulated consumption and investment. However, few studies have measured, or tested the economic consequences of, inflation expectations. In this paper, we collect high-frequency information from primary and secondary sources to measure expected inflation in the United Kingdom between the wars. A high-frequency vector autoregression suggests that inflation expectations were an important source of the early stages of economic recovery in interwar Britain.
Original languageEnglish
Pages (from-to)844-870
JournalEconomic History Review
Volume76
Issue number3
DOIs
Publication statusPublished - 2023
Externally publishedYes

Subject classification (UKÄ)

  • Economic History

Free keywords

  • E3
  • E6
  • N14
  • Great Depression
  • inflation expectations
  • interwar Britain
  • regime change

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