Hostname: page-component-586b7cd67f-r5fsc Total loading time: 0 Render date: 2024-11-20T13:28:17.282Z Has data issue: false hasContentIssue false
  • English
  • Français

Did High Wages or High Interest Rates Bring Down the Weimar Republic? A Cointegration Model of Investment in Germany, 1925–1930

Published online by Cambridge University Press:  03 March 2009

Hans-Joachim Voth
Hans-Joachim Voth
Affiliation:
Junior Research Fellow at Clare College, Cambridge, CB1 2TL, England, and a doctoral student at Nuffield College, Oxford OX1 1NF, England.
Get access Rights & Permissions [Opens in a new window]

Abstract

This article offers a new interpretation of the low level of investment in Germany during the interwar period. Earlier contributions attributed the slow expansion of capital stock either to excessive wages due to state intervention and unionization or to the high cost of capital. These hypotheses are tested by estimating a cointegration model of investment. Counterfactual simulations demonstrate that lower wages would have lowered investment still further and that high interest rates acted as the main brake on investment during the second half of the 1920s.

Type
Articles
Information
The Journal of Economic History , Volume 55 , Issue 4 , December 1995 , pp. 801 - 821
Copyright
Copyright © The Economic History Association 1995

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Artus, Patrick, and Muet, Pierre-Alain. Investment and Factor Demand. Amsterdam: North-Holland, 1990.Google Scholar
Balderston, , Theodore, . “German Banking between the Wars: The Crisis of the Credit Banks”. Business History Review 65 (1991): 554–605.CrossRefGoogle Scholar
Balderston, , Theodore, . The Origins and Course of the German Crisis 1923–1932. Berlin: Haude & Spener, 1993.Google Scholar
Banerjee, , Anindya, . “Testing Integration and Cointegration: An Overview”. oxford Bulletin of Economics and Statistics 54 (1992): 225–55.Google Scholar
Bardsen, , Gunnar, . “The Estimation of Long-Run Coefficients from Error-Correction Models”. Oxford Bulletin of Economics and Statistics 51 (1989): 345–50.CrossRefGoogle Scholar
Berndt, , Ernst, . The Practice of Econometrics. Reading, MA: Addison-Wesley, 1991.Google Scholar
Borchardt, , Knut, . Perspectives on Modern German Economic History and Policy. Cambridge: Cambridge University Press, 1991.CrossRefGoogle Scholar
Borchardt, , Knut, . and Ritschl, Albrecht. “Could Brüning Have Done It? A Keynesian Model of Interwar Germany, 1925–32”. European Economic Review 36 (1992): 695–701.Google Scholar
Bruno, , Michael, . “Aggregate Supply and Demand Factors in the OECD Economies: An Update”. Economica 53 (1986): S35–S52.Google Scholar
Chow, , Gregory, , and Lin, An. “Best Linear Unbiased Interpolation, Distribution, and Extrapolation of Time Series by Related Series”. Review of Economics and Statistics 53 (1971): 372–75.Google Scholar
Clark, , Peter, . “Investment in the 1970s: Theory, Performance, and Prediction”. Brookings Papers on Economic Activity (1979): 73–113.Google Scholar
Coen, , Robert, . “Tax Policy and Investment Behaviour: A Comment”. American Economic Review 59 (1969): 73–113.Google Scholar
Corbett, , David, . “Unemployment in Interwar Germany”. Ph.D. diss., Harvard University, 1991.Google Scholar
Deadman, D., and Charemtzka, W.. New Directions in Econometric Practice. General to Specific Modelling Cointegration and Vector Autoregression. Aldershot: Edward Elgar, 1992.Google Scholar
DeLong, , Bradford, . “Productivity Growth and Machinery Investment: A Long-Run Look, 1870–1980”. this JOURNAL 52 (1992): 307–24.Google Scholar
DeLong, , Bradford, , and Summers, Lawrence. “Equipment Investment and Economic Growth”. Quarterly Journal of Economics 106 (1991): 445–502.Google Scholar
DeLong, , Bradford, . “Equipment Investment and Economic Growth: How Strong is the Nexus?” Brookings Papers on Economic Activity (1992): 157–99.Google Scholar
Dickey, , David, , and Fuller, Wayne. “Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root”. Econometrica 49 (1981): 1057–72.CrossRefGoogle Scholar
Duharcourt, P. La fonction d'investissement. Paris: Sirey, 1970.Google Scholar
Feldman, , D, Gerald. The Great Disorder: Politics, Economics, and Society in the German Inflation 1914–1924. Oxford: Oxford University Press, 1993.Google Scholar
Gerfin, , Harald, . “Gewinne, Investitionen und Beschäftigung”. Zeitschrift für Wirtschaflsund Sozialwissenschaften 108 (1988): 593–616.Google Scholar
Germany, . Statistisches Reichsamt. Statistisches Jahrbuch für das Deutsche Reich. Berlin, 1926–1935.Google Scholar
Gould, , John, . “The Use of Endogenous Variables in Dynamic Models of Investment”. Quarterly Journal of Economics 83 (1969): 580–99.Google Scholar
Granger, , Clive, , and Newbold, Paul. “Spurious Regressions in Econometrics”. Journal of Econometrics 26 (1974): 111–20.Google Scholar
Hardach, , Gerd, . Weltmarktorientierung und relative Stagnation: Währungspolitik in Deutschland 1924–1931. Berlin: Duncker und Humblot, 1976.Google Scholar
Helfferich, , Karl, . Deutschlands Volkswohlstand 1888–1913. 6th ed. Berlin, 1915.Google Scholar
Hendry, , David, . PC-GIVE. An Interactive Econometric Modelling System. Oxford: Institute of Economics and Statistics, 1989.Google Scholar
Hoffmann, , Walter, . Das Wachstum der deutschen Wirtschaft seit der Mitte des 19. Jahrhunderts. Berlin: Springer, 1965.Google Scholar
Holtfrerich, , Carl-Ludwig, . “Zu hohe Löhne in der Weimarer Republik? Bemerkungen zur Borchardt-These”. Geschichte und Gesellschaft 10 (1984): 122–41.Google Scholar
Institut für Konjunkturforschung. Konjunkturstatistisches Handbuch. Berlin, 1935.Google Scholar
James, , Harold, . The Reichsbank and Public Finance in Germany. Frankfurt am Main: Fritz Knapp, 1985.Google Scholar
James, , Harold, . The German Slump. Politics and Economics 1924–1936. Oxford: Oxford University Press, 1986.Google Scholar
James, , Harold, . “Economic Reasons for the Collapse of the Weimar Republic”. In Weimar: Why Did German Democracy Fail? edited by Ian, Kershaw, 30–91. London: Weidenfeld & Nicolson, 1990.Google Scholar
Jarque, C. M., and Bera, A. K.. “Efficient Tests for Normality, Homoscedasticity and Serial Independence of Residuals”. Economics Letters 6 (1980): 255–59.CrossRefGoogle Scholar
Jorgenson, , W, Dale. “Capital Theory and Investment Behaviour”. American Economic Review 53 (1963): 247–59.Google Scholar
Kelejian, , Harry, , and Oates, Wallace. Introduction to Econometrics: Principles and Applications. New York: Harper & Row, 1974.Google Scholar
Kennedy, M. C. “The Economy as a Whole”. In The UK Economy: A Manual of Applied Economics, edited by Artis, Michael et al., 1–71. London: Weidenfeld and Nicholson, 1992.Google Scholar
Landmann, Oliver, and Jerger, Jürgen. “Unemployment and the Real Wage Gap: A Reappraisal of the German Experience”. Weltwirtschaftliches Archiv 129 (1993): 689–717.Google Scholar
Lee, J. “Policy and Performance in the German Economy, 1925–35: A Comment on the Borchardt Thesis”. In The Burden of German History, 131–50, edited by Laffan, M., 131–50. London: Goethe Institut, 1988.Google Scholar
Lévy-Leboyer, Maurice and Bourguignon, François. The French Economy in the Nineteenth Century: An Essay in Econometric Analysis. Cambridge: Cambridge University Press, 1990.Google Scholar
MacKinnon, J. G. “Critical Values for Cointegration Tests”. In Long-run Econometric Relationships, edited by Engle, Robert and Granger, Clive, 267–76. Oxford: Oxford University Press, 1991.Google Scholar
Müller, , Helmut, . Die Zentralbank - eine Nebenregierung. Reichsbankpräsident Schacht als Politiker der Weimarer Republik. Opladen: Westdeutscher Verlag, 1973.CrossRefGoogle Scholar
Phelps, , Edmund, . Structural Slumps: The Modem Equilibrium Theory of Unemployment, interest and Assets. Cambridge, MA: Harvard University Press, 1994.Google Scholar
Ritschl, , Albrecht, . “Zu hohe Löhne in der Weimarer Republik?” Geschichte und Gesellschaft 16 (1990): 375–402.Google Scholar
Ritschl, , Albrecht, . “Goldene Jahre? Zu den Investitionen in der Weimarer Republik”. Zeitschrift für Wirtschafts- und Sozialwissenschaften 114 (1994): 99–111.Google Scholar
Ritschl, , Albrecht, , and Broadberry, Steve. “Real Wages, Productivity and Unemployment during the 1920s”. Explorations in Economic History 32 (1995): 327–49.Google Scholar
Schumpeter, , A, Joseph. Aufsätze zur Wirtschaftspolitik. Edited by Wolfgang, Stolper and Christian, Seidl. Tübingen: Mohr, 1985.Google Scholar
Sommariva, , Andrea, , and Tullio, Giuseppe. German Macroeconomic History, 1880–1979. London: Macmillan, 1987.CrossRefGoogle Scholar
Stolper, , Wolfgang, , and Seidl, Christian. Introduction to Aufsätze zur Wirtschaftspolitik, by Joseph, A. Schumpeter. Tübingen: Mohr, 1985.Google Scholar
Voth, , Hans-Joachim, . “Investitionen in den “Goldenen Jahren” der Weimarer Republik”. Zeitschnft für Wirtschafts- und Sozialwissenschaften 113 (1993): 629–33.Google Scholar
Voth, , Hans-Joachim, . “Wages, Investment, and the Fate of the Weimar Republic: A Long-Term Perspective”. German History 11 (1993): 265–92.CrossRefGoogle Scholar
Voth, , Hans-Joachim, . “Zinsen, Investitionen und das Ende der groβen Depression in Deutschland”. Zeitschrift für Wirtschafts- und Sozialwissenschaften 114 (1994): 267–81.Google Scholar
Wagemann, , Ernst, , ed. Konjunkturstatistisches Handbuch 1936. Berlin: Hanseatische Verlagsanstalt, 1935.Google Scholar
Winkler, , Heinrich-August, . Der Schein der Normalität. Arbeiter und Arbeiterbewegung 1924–1929. Bonn/Berlin: Dietz, 1989.Google Scholar