Regime change and recovery in 1930s Britain

By analysing narrative evidence from British newspapers, this paper examines when expectations of deflation ended during the recovery of the 1930s. Examining monthly macroeconomic data, contemporary price reports, and daily policy announcements, we show that despite a speculative boom and rising prices in summer 1932, deflation then returned in Britain. In contrast, in spring 1933, inflationary news shocks in the US, new British capital to support the pound, and joint British and US rejection of a return to the gold standard contributed to the end of deflationary expectations and economic recovery in Britain