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Fiscal Policy and Employment in Interwar Britain: Some Evidence from a New Model

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  • Dimsdale, Nicholas H
  • Horsewood, Nicholas

Abstract

This paper presents a new model of the British economy in the interwar period. The model is used for counterfactual simulations which are designed to shed light on major controversies over economic policy. In this way the claim made by Henderson and Keynes that expenditure on public works could have reduced unemployment can be tested against the opposing Treasury View which emphasized the importance of crowding-out effects. The effect of a change in the replacement ratio is examined, which is relevant to the controversy on the extent to which unemployment was induced by the benefit system and also the determinants of the natural rate of unemployment in the interwar period. Copyright 1995 by Royal Economic Society.

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  • Dimsdale, Nicholas H & Horsewood, Nicholas, 1995. "Fiscal Policy and Employment in Interwar Britain: Some Evidence from a New Model," Oxford Economic Papers, Oxford University Press, vol. 47(3), pages 369-396, July.
    • Handle: RePEc:oup:oxecpp:v:47:y:1995:i:3:p:369-96
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    Cited by:

    1. Crafts, Nicholas & Mills, Terence C., 2013. "Rearmament to the Rescue? New Estimates of the Impact of “Keynesian” Policies in 1930s' Britain," The Journal of Economic History, Cambridge University Press, vol. 73(4), pages 1077-1104, December.
    2. Ed Butchart, 1997. "Unemployment and Non-Employment in Interwar Britain," Oxford Economic and Social History Working Papers _016, University of Oxford, Department of Economics.
    3. Kent Matthews, 2013. "No Plan B: But is There a ‘Third Way'?," Economic Affairs, Wiley Blackwell, vol. 33(2), pages 220-231, June.
    4. Postel-Vinay, Natacha & Cloyne, James & Dimsdale, Nicholas, 2018. "Taxes and Growth: New Narrative Evidence from Interwar Britain," CEPR Discussion Papers 12962, C.E.P.R. Discussion Papers.
    5. Barry Eichengreen & Olivier Jeanne, 2000. "Currency Crisis and Unemployment: Sterling in 1931," NBER Chapters, in: Currency Crises, pages 7-43, National Bureau of Economic Research, Inc.
    6. Nicholas Dimsdale & Nicholas Horsewood, 2009. "The dynamics of consumption and investment in the late Victorian economy," Working Papers 9007, Economic History Society.
    7. Bayoumi, Tamim & Bordo, Michael D, 1998. "Getting Pegged: Comparing the 1879 and 1925 Gold Resumptions," Oxford Economic Papers, Oxford University Press, vol. 50(1), pages 122-149, January.
    8. Ronicle, David, 2022. "Turning in the widening gyre: monetary and fiscal policy in interwar Britain," Bank of England working papers 968, Bank of England.
    9. Nicholas Crafts & Peter Fearon, 2010. "Lessons from the 1930s Great Depression," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 26(3), pages 285-317, Autumn.
    10. Nicholas Dimsdale & Nicholas Horsewood, 2012. "The impact of the Great Depression of the 1930s on the British economy," Working Papers 12028, Economic History Society.
    11. Nicholas Crafts, 2013. "Returning to growth: lessons from the 1930s," Working Papers 13010, Economic History Society.
    12. Jason Lennard & Meredith M. Paker, 2023. "Devaluation, Exports, and Recovery from the Great Depression," Discussion Papers 2403, Centre for Macroeconomics (CFM).
    13. Crafts, Nicholas & Mills, Terence C, 2012. "Fiscal Policy in a Depressed Economy: Was There a ‘Free Lunch’ in 1930s’ Britain?," CAGE Online Working Paper Series 106, Competitive Advantage in the Global Economy (CAGE).
    14. Barry Eichengreen, 2016. "The Great Depression in a Modern Mirror," De Economist, Springer, vol. 164(1), pages 1-17, March.
    15. Ed Butchart, 1997. "Unemploymentand Non-Employment in Interwar Britain," Economics Series Working Papers 1997-W16, University of Oxford, Department of Economics.
    16. Tony Syme, 2000. "Public Policy and Unemployment in Interwar France: An Empirical Approach," Economics Series Working Papers 55, University of Oxford, Department of Economics.

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