Hyperinflation, the Great Depression, and German Collective Economic Memory
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 forthcoming in Economics & Politics; please find an ungated version here. You can also find a short discussion of our findings and what that means for Christine Lagarde, the ECB’s new president, in our policy paper, published with the Jacques Delors Institute, Berlin (in English or German).
The results of our study were also covered online by Die Zeit and Handelsblatt, in German, and by Bloomberg and The Spectator, in English. The German newspaper Süddeutsche Zeitung has also published a piece in their printed edition.