Zinsen, Investitionen und das Ende der Großen Depression in Deutschland

Abstract

This paper is a reply to RitschVs recent critique 1994 of an earlier article of mine (Voth 1993). Reestimation of an investment function for the interwar period proves that Ritschl's results depend crucially on the use of a poor proxy for capital cost as well as unrealistic assumptions about the mean lag between interest rate changes and investment decisions. Further, the dummy variable that is supposed to measure the changeover to economic planning under the Nazis only reflects the cyclical upturn in business climate. If any one of these shortcomings is remedied, evidence from regression analysis suggests that interest rates strongly influenced German interwar investment. For the period at the heart of the Borchardt controversy, the years 1925 - 29, there is still no evidence of either consumption depressing investment or wages diminishing profits. Consequently, there are thus far no emprirical findings to support Borchardt's wage-push hypothesis.