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Losing the Country: Debt, Deflation, and the Rural Rise of the Nazi Party

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  • Thilo Nils Hendrik Albers

    (HU Berlin)

  • Felix Kersting

    (HU Berlin)

  • Monique Reiske

    (HU Berlin)

Abstract

Using interwar German agriculture as a case, this paper explores the political cost of debt deflation which we characterize with farmers' leverage ratios. Primary deficits drove their increase during 1924-1928, but deflation pushed them to unsustainable levels during 1929-1932. We construct corresponding exogenous county-level exposure measures and show their effect on economic distress as well as political radicalization. Our results suggest that debt deflation increased the Nazi party's rural vote share by over 8 percentage points relative to a counterfactual baseline scenario and was thus a necessary condition for its rural dominance and ascension to parliamentary power.

Suggested Citation

  • Thilo Nils Hendrik Albers & Felix Kersting & Monique Reiske, 2024. "Losing the Country: Debt, Deflation, and the Rural Rise of the Nazi Party," Rationality and Competition Discussion Paper Series 511, CRC TRR 190 Rationality and Competition.
    • Handle: RePEc:rco:dpaper:511
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    References listed on IDEAS

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    1. King, Gary & Rosen, Ori & Tanner, Martin & Wagner, Alexander F., 2008. "Ordinary Economic Voting Behavior in the Extraordinary Election of Adolf Hitler," The Journal of Economic History, Cambridge University Press, vol. 68(4), pages 951-996, December.
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    More about this item

    Keywords

    great depression; weimar germany; nsdap; extremism; debt deflation; economic crisis;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • N54 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Europe: 1913-

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