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Returning to growth: lessons from the 1930s

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  • Nicholas Crafts

    (University of Warwick)

Abstract

"This paper reviews 1930s’ UK experience focusing on the recovery phase. This was initially based on a ‘cheap money’ policy which reduced real interest rates when nominal rates were close to zero and fiscal consolidation was in full swing. Unfortunately, microeconomic policies to raise prices had adverse effects on competition and productivity performance suffered. Fiscal stimulus from rearmament boosted growth significantly after 1935 but the multiplier was low. Key policy implications for today are the current UK inflation-targeting regime may need to be reconsidered and that it may be optimistic to expect a ‘plan B’ to provide a major stimulus."

Suggested Citation

  • Nicholas Crafts, 2013. "Returning to growth: lessons from the 1930s," Working Papers 13010, Economic History Society.
    • Handle: RePEc:ehs:wpaper:13010
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    References listed on IDEAS

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    1. Sabaté, Marcela & Fillat, Carmen & Escario, Regina, 2019. "Budget deficits and money creation: Exploring their relation before Bretton Woods," Explorations in Economic History, Elsevier, vol. 72(C), pages 38-56.

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    More about this item

    Keywords

    cheap money; inflation-targeting; fiscal stimulus; productivity; rearmament;
    All these keywords.

    JEL classification:

    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-

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