Sticky Prices and Interwar Economic Fluctuations

Summary & aims

The interwar era was the most turbulent in modern British economic history, involving mass unemployment, major recessions and spells of inflation and deflation. What caused this turbulence? While economic historians have focused on a long list of factors, we investigate a single unifying explanation: sticky prices.

Methodology

The interwar era was the most turbulent in modern British economic history, involving mass unemployment, major recessions and spells of inflation and deflation. What caused this turbulence? While economic historians have focused on a long list of factors, we investigate a single unifying explanation: sticky prices. If firms adjusted prices infrequently, then minor shocks could have had major consequences. This project analyses price setting behaviour through the supply chain using a new micro data set on individual price quotations collected from primary sources.

Funder: Leverhulme Trust

Duration: January 2019 to December 2019