Fiscal Policy in the 1930s in the US, the UK, Germany and Japan

The following studies provide some good discussion of fiscal policy in these nations in the 1930s:

(1) the UK:

Middleton, Roger. 1981. “The Constant Employment Budget Balance and British Budgetary Policy, 1929–39,” Economic History Review 34: 266–286.

Broadberry, S. N. 1984. “Fiscal Policy in Britain in the 1930s,” Economic History Review 37: 95–102.

Middleton, R. 1984. “The Measurement of Fiscal Influence in Britain in the 1930s,” Economic History Review 37: 103–106.

Middleton, in debate with Broadberry (1984), found that UK government fiscal policy was continuously contractionary from 1929 to 1936, though after the recovery began was somewhat less restrictive. Although the UK abandoned the gold exchange standard early and devalued, its export-led growth was insufficient to restore full employment in the absence of stimulative fiscal policy, as any Keynesian would suspect.

(2) The US:

E. Cary Brown. 1956. “Fiscal Policy in the Thirties: A Reappraisal,” American Economic Review 46: 857–879.

Peppers, L. 1973. “Full Employment Surplus Analysis and Structural Change: the 1930s,” Explorations in Economic History 10: 197–210.

These are now classic studies of US fiscal policy in the 1930s: their findings are that American fiscal policy under Roosevelt, though it was expansionary and did have an impact on recovery, was too weak to rapidly restore full employment.

(3) Germany:

Cohn, R. L. 1992. “Fiscal Policy in Germany during the Great Depression,” Explorations in Economic History 29: 318–342.

Cohn shows that the rapid recovery in Germany after 1933 was caused by the change in government spending when the Nazi government turned to expansionary fiscal policy.

(4) Japan:

Myung Soo Cha. 2003. “Did Takahashi Korekiyo Rescue Japan from the Great Depression?,” The Journal of Economic History 63.1: 127–144.

This shows that fiscal policy was a major element in Japan’s strong recovery from the depression under Takahashi Korekiyo.