German real wages in the Depression

[Jim Devine <jdevine03@xxxxxxxxx>]

The Role of Real Wages, Productivity, and Fiscal Policy in Germany's
Great Depression 1928-37

Jonas D.M. Fisher (Federal Reserve Bank of Chicago)
Andreas Hornstein (Federal Reserve Bank of Richmond)

Abstract

We study the behavior of output, employment, consumption, and
investment in Germany during the Great Depression of 1928-37. In this
time period, real wages were countercyclical, and productivity and
fiscal policy was procyclical. We use the neoclassical growth model to
investigate how much these factors contribute to the depression. We
find that real wages which were significantly above their market
clearing levels were the most important factor for the economic
decline in the depression. [!!!] Changes in productivity and fiscal
policy were also important for the decline and recovery. Even though
our analysis is limited to a small number of factors, the model
accounts surprisingly well for the Depression in Germany. (Copyright:
Academic Press)

[Note that the Federal Reserve of Chicago has few links to the
University fo Chicago Econ. Dept.]
-- 
Jim Devine
"Segui il tuo corso, e lascia dir le genti." (Go your own way
and let people talk.) -- Karl, paraphrasing Dante