Working Paper: CEPR ID: DP4191
Authors: Mark Weder
Abstract: The Paper finds empirical evidence on the ripple effect of sunspots on the interwar German economy. It identifies a sequence of negative shocks to expectations for the 1927-32 period. The artificial economy predicts the 1928-32 depression and a long boom from 1933 onwards. Overall, a tangible fraction of interwar output volatility is attributed for by sunspots.
Keywords: applied dynamic general equilibrium; Germany; Great Depression; indeterminacy
JEL Codes: E32; N14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| sunspots (E32) | aggregate demand (E00) |
| aggregate demand (E00) | economic activity (E20) |
| sunspots (E32) | output volatility (E23) |
| sunspots (E32) | economic downturn (F44) |
| economic activity (E20) | recovery (P21) |