Rearmament to the rescue? New estimates of the impact of ‘Keynesian’ policies in 1930s’ Britain \ud

Book English OPEN
Crafts, N. F. R. ; Mills , Terence C. (2012)
  • Publisher: Department of Economics, University of Warwick
  • Subject: HC | DA

We report estimates of the fiscal multiplier for interwar Britain based on quarterly data, time-series \ud econometrics, and ‘defense news’. We find that the government expenditure multiplier was in the \ud range 0.5 to 0.8, much lower than previous estimates. The scope for a Keynesian solution to \ud recession was much lower than is generally supposed. We do find that rearmament gave a \ud substantial boost to real GDP after 1935 but this was because the private sector responded to news \ud of massive future defense spending and does not imply that the multiplier effect of temporary public \ud works programs would have been large. \ud
  • References (47)
    47 references, page 1 of 5

    Auerbach, Alan J. and Yuriy Gorodnichenko. “Fiscal Multipliers in Recession and Expansion.” NBER Working Paper No. 17447, 2011.

    Barna, Tibor. Redistribution of Incomes through Public Finance in 1937. Oxford: Clarendon Press, 1945.

    Barro, Robert J. and Charles J. Redlick. “Macroeconomic Effects from Government Purchases and Taxes.” Quarterly Journal of Economics 126, no. 1 (2011): 51-102.

    Blanchard, Olivier and Roberto Perotti. “An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output.” Quarterly Journal of Economics 117, no. 4 (2002): 1329-68.

    Bowden, Sue, David Higgins, and Chris Price. “A Very Peculiar Practice: Underemployment in Britain during the Interwar Years.” European Review of Economic History 10, no. 1 (2006): 89-108.

    British Parliamentary Papers. Memorandum by the Chancellor of the Exchequer on the Future Exchequer Balance Sheet. Cmd. 376, 1919.

    British Parliamentary Papers. General Annual Report on the British Army for the Year Ending 30th September, 1920. Cmd. 1610, 1922.

    British Parliamentary Papers. General Annual Report on the British Army for the Year Ending 30th September, 1921. Cmd. 1941, 1923.

    British Parliamentary Papers. Statement Relating to Defence. Cmd. 4827, 1935.

    British Parliamentary Papers. Statement Relating to Defence. Cmd. 5374, 1937.

  • Metrics
    0
    views in OpenAIRE
    0
    views in local repository
    16
    downloads in local repository

    The information is available from the following content providers:

    From Number Of Views Number Of Downloads
    Warwick Research Archives Portal Repository - IRUS-UK 0 16
Share - Bookmark