Inflation in the 1920s and 2020s (OeNB-Projekt Nr. 19091)

Inflationary Shocks can always occur again, especially in times of increasing political tensions on a global scale as now, where political decision makers disturb economic relations by war, including trade war, and other aggressive measures. Apart from scientific questions, like the theoretical explanation of inflation, also policy recommendations for monetary policy makers will be derived.The project will analyze, in a comparative way, the high inflations in the 1920s and in the 2020s in Austria and Germany, with a view also on Czechoslovakia and its successor states. Different theories of inflation will be tested as explanations of these developments, considering also the different institutional and political circumstances in the two countries and in the two periods. Historical and political research will shed light on the circumstances and motives of the agents, especially the policy makers. The main task of the project consists in econometric analyses of the determinants of inflation. The aim is to discover whether similar shocks triggered the inflationary processes and whether policy makers reacted in a similar way to them.Methods applied will be econometric estimations, macroeconomic hypothesis testing and model building, and policy analysis through simulations of alternative policies and the design of optimal monetary and fiscal policies.

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