The Debt-Inflation Channel of the German Hyperinflation /
Brunnermeier, Markus K.
The Debt-Inflation Channel of the German Hyperinflation / Markus K. Brunnermeier, Sergio A. Correia, Stephan Luck, Emil Verner, Tom Zimmermann. - Cambridge, Mass. National Bureau of Economic Research 2023. - 1 online resource: illustrations (black and white); - NBER working paper series no. w31298 . - Working Paper Series (National Bureau of Economic Research) no. w31298. .
June 2023.
This paper studies how a large increase in the price level is transmitted to the real economy through firm balance sheets. Using newly digitized macro- and micro-level data from the German inflation of 1919-1923, we show that inflation led to a large reduction in real debt burdens and bankruptcies. Firms with higher nominal liabilities at the onset of inflation experienced a larger decline in interest expenses, a relative increase in their equity values, and higher employment during the inflation. The results are consistent with real effects of a debt-inflation channel that operates even when prices and wages are flexible.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.
Price Level • Inflation • Deflation
General
General
General
Financial Markets and Institutions
The Debt-Inflation Channel of the German Hyperinflation / Markus K. Brunnermeier, Sergio A. Correia, Stephan Luck, Emil Verner, Tom Zimmermann. - Cambridge, Mass. National Bureau of Economic Research 2023. - 1 online resource: illustrations (black and white); - NBER working paper series no. w31298 . - Working Paper Series (National Bureau of Economic Research) no. w31298. .
June 2023.
This paper studies how a large increase in the price level is transmitted to the real economy through firm balance sheets. Using newly digitized macro- and micro-level data from the German inflation of 1919-1923, we show that inflation led to a large reduction in real debt burdens and bankruptcies. Firms with higher nominal liabilities at the onset of inflation experienced a larger decline in interest expenses, a relative increase in their equity values, and higher employment during the inflation. The results are consistent with real effects of a debt-inflation channel that operates even when prices and wages are flexible.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.
Price Level • Inflation • Deflation
General
General
General
Financial Markets and Institutions