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The Debt-Inflation Channel of the German (Hyper-)Inflation
Markus Brunnermeier
Sergio Correia
Stephan Luck
Emil Verner
Tom Zimmermann
蝌蚪网 Review (Forthcoming)
Abstract
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.
