Data and Code for: The Debt-Inflation Channel of the German (Hyper-)Inflation

Principal Investigator(s): View help for Principal Investigator(s) Markus Brunnermeier, Princeton University; Sergio Correia, Board of Governors of the Federal Reserve System; Stephan Luck, Federal Reserve Bank of New York; Emil Verner, MIT Sloan School of Management; Tom Zimmermann, University of Cologne

Version: View help for Version V1

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replication_package_v20250203			03/26/2025 03:00:AM
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Project Citation:

Brunnermeier, Markus, Correia, Sergio, Luck, Stephan, Verner, Emil, and Zimmermann, Tom. Data and Code for: The Debt-Inflation Channel of the German (Hyper-)Inflation. Nashville, TN: American Economic Association [publisher], 2025. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2025-06-06. https://doi.org/10.3886/E220202V1

Project Description

Summary: This paper studies how a large increase in the price level is transmitted to the real economy through firm balance sheets. Using newly digitized macro- and micro-level data from the German inflation of 1919-1923, we show that inflation led to a large reduction in real debt burdens and bankruptcies. Firms with higher nominal liabilities at the onset of inflation experienced a larger decline in interest expenses, a relative increase in their equity values, and higher employment during the inflation. The results are consistent with real effects of a debt-inflation channel that operates even when prices and wages are flexible.

Funding Sources: Deutsche Forschungsgemeinschaft - Germany’s Excellence Strategy (EXC2126/139083886); Princeton University’s Bendheim Center for Finance; MIT Research Support Committee’s Ferry Fund

Scope of Project

Subject Terms: Hyperinflation; Inflation; corporate debt; bankruptcy; prices; stock prices; investments; Weimar

JEL Classification:
      E31 Price Level; Inflation; Deflation
      G30 Corporate Finance and Governance: General
      N14 Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: Europe: 1913-

Geographic Coverage: Germany

Time Period(s): 1917 – 1924

Universe: Post WW1 German firms

Data Type(s): administrative records data; aggregate data

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Published Versions

V1 [2025-06-06]

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