Hyperinflation, the Great Depression, and German Collective Economic Memory

Lukas Haffert*, Nils Redeker**, and Tobias Rommel***
*University of Zurich, **Jacques Delors Institute Berlin, and ***Technical University of Munich

The well-known German aversion to inflation has attracted a lot of interest and is often attributed to a specific historical memory: Weimar. Yet we do not know much about why hyperinflation seems to overshadow the Great Depression in German collective economic memory. To answer this question, we study what exactly it is that Germans believe to remember about their past. Using original survey data, we show that many Germans do not distinguish between hyperinflation and the Great Depression, but see them as two dimensions of the same crisis. They conflate Weimar economic history into one big crisis, encompassing both rapidly rising prices and mass unemployment. Additionally, more educated and politically interested Germans are more likely to commit this fallacy. Our finding thus nuances ideational explanations for Germany’s economic policy stance in the European Union.

This paper is published in Economics & Politics; here, you can access the gated or ungated version. You can also find a short discussion of our findings in the German economics blog Ökonomenstimme, in the discussion series of the Schnelldienst published by the ifo Institute, as well as what our findings imply for Christine Lagarde, the ECB’s new president, in a policy paper published with the Jacques Delors Institute, Berlin.

The results of our study were also covered online by Die Zeit and Handelsblatt, in German, and by Bloomberg, The Spectator, and the Washington Post, in English. The German newspaper Süddeutsche Zeitung has also published a piece in their printed edition.