Inflation Expectations and Recovery from the Depression in 1933: Evidence from the Narrative Record

Jalil, Andrew; Rua, Gisela

doi:10.17016/feds.2015.029

Cited by 9 publications

(8 citation statements)

References 31 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…10 For instance, see Bachmann et al (2015); Burke and Ozdagli (2014); Armantier, Bruine de Bruin, Topa, Klaauw, and Zafar (2015); Cashin (2016); Ichiue and Nishiguchi (2015); Crump, Eusepi, Tambalotti, and Topa (2015); Vellekoop and Wiederholt (2017); Christelis, Georgarakos, Jappelli, and van Rooij (2016); and the evidence from historical data in Romer and Romer (2013); Eggertsson (2008); Jalil and Rua (2016).…”

mentioning

confidence: 99%

Managing Households' Expectations with Salient Economic Policies

2019

View full text Add to dashboard Cite

The empirical effectiveness of economic policies that operate theoretically through similar channels differs substantially. We document this fact by comparing an easy-to-grasp expectations-based policy, unconventional fiscal policy, with a policy whose implications are harder to understand by non-expert consumers, forward guidance. Both policies aim to stimulate consumption via managing inflation expectations based on the Euler equation. Unconventional fiscal policy uses trivial announcements of future consumer-price increases to boost inflation expectations and consumption expenditure on impact. Instead, forward guidance requires that agents understand the inflationary effects of future low interest rates to increase their inflation expectations and spending today. We find households' inflation expectations and readiness to spend react substantially to unconventional fiscal policy announcements. The reaction is homogeneous across households with different levels of sophistication. Instead, households do not react after forward guidance announcements. These results support recent work stressing the importance of limited cognition for the effectiveness of policies.

show abstract

mentioning

confidence: 99%

Managing Households' Expectations with Salient Economic Policies

2019

View full text Add to dashboard Cite

show abstract

“…47 Temin and Wigmore (1990) proposed the "change of regime" hypothesis for explaining the recovery from the Great Depression. See, also, Eggertson (2008) and Jalil and Rua (2016) for recent work along these lines.…”

Section: Regression Resultsmentioning

confidence: 99%

The London Monetary and Economic Conference of 1933 and the End of The Great Depression: A “Change of Regime” Analysis

Edwards

2017

View full text Add to dashboard Cite

I thank Michael Poyker for his assistance. I thank Michael Bordo, Josh Hausman, and George Tavlas for comments. I have benefitted from conversations with Ed Leamer. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

show abstract

“…The economy began to recover noticeably after mid-1934. The election of Franklin Roosevelt seemed to produce a shift in expectations, boosting the hopes and confidence of many (Jalil and Rua 2015; Eggertsson 2008). The policy actions undertaken within a few months of his inauguration in March 1933 were a radical change.…”

Section: The Failure Of Orthodox Policy 1932–1935mentioning

confidence: 99%

Reading Keynes at the Zero Lower Bound: The Great Depression, the Liquidity Trap, and Unconventional Policy

Sutch

2018

J Hist Econ Thought

View full text Add to dashboard Cite

John Maynard Keynes’s analysis of the Great Depression has strong parallels to recent theorizing about the post-2008 Great Recession. There are also remarkable similarities between the two historical episodes: the collapse of demand for new fixed investment, the role of the zero lower bound liquidity trap in hampering conventional monetary policy, the multi-year period of near-zero short-term rates, and the protracted period of subnormal prosperity. A major difference between then and now is that monetary authorities in the recent situation actively pursued an unconventional policy with massive purchases of long-term securities. Keynes couldn’t convince authorities of his era to pursue such a plan, but it was precisely the monetary policy he advocated for a depressed economy stuck at the zero lower bound of nominal interest rates.

show abstract

Inflation Expectations and Recovery from the Depression in 1933: Evidence from the Narrative Record

Cited by 9 publications

References 31 publications

Managing Households' Expectations with Salient Economic Policies

Managing Households' Expectations with Salient Economic Policies

The London Monetary and Economic Conference of 1933 and the End of The Great Depression: A “Change of Regime” Analysis

Reading Keynes at the Zero Lower Bound: The Great Depression, the Liquidity Trap, and Unconventional Policy

Contact Info

Product

Resources

About