IMF Working Papers

Financial Boom and Bust in the 19th Century: How Bad Was Germany’s Gründerkrise?

By Johannes Wiegand

July 4, 2025

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Format: Chicago

Johannes Wiegand. "Financial Boom and Bust in the 19th Century: How Bad Was Germany’s Gründerkrise?", IMF Working Papers 2025, 136 (2025), accessed July 6, 2025, https://doi.org/10.5089/9798229016131.001

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

The Gründerkrise of the 1870s marks Germany’s first major experience with financial boom and bust. The assessment of its real impact has, however, been hampered by the non-ability of comprehensive and reliable national accounts data for the 19th century. This short paper seeks to overcome such difficulties by combining common factor analysis as proposed by Sarferaz and Uebele (2009) with financial filtering a la Borio et al. (2013) and Berger et al. (2015). The results confirm that the Gründerkrise was by far modern Germany’s worst peacetime economic crisis prior to the Great Depression in the late 1920s. Financial and monetary forces amplified the boom of 1871-73, deepened the downturn in 1874-79, and acted as a drag on the recovery until well into the 1880s. The pattern resembles modern ‘balance sheet recessions’, i.e., protracted economic weakness in the aftermath of financial crises.

Subject: Agricultural commodities, Asset prices, Business cycles, Commodities, Economic growth, Economic recession, Export fluctuations, Financial statements, Gold, International trade, National accounts, Prices, Public financial management (PFM), Silver

Keywords: Agricultural commodities, Asia, Asset prices, Balance sheet recession, Bank credit, Business cycles, Economic recession, Euro Area, Europe, Export fluctuations, Factor analysis, Factor models, Financial crisis, Financial filter, Financial statements, German economic history, Global, Gold, Gründerboom, Gründerkrise, Silver

Publication Details

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