The driving question of my current research is: What are the effects of large-scale fiscal stimulus programs? Policy makers composing such a scheme are facing two challenges: first, to overcome short-run unemployment and second, to foster long-run economic growth. While government consumption has immediate effects, public investment tends to build multipliers over longer horizons. In the German Interbellum the Hitler administration provided a broad set of measures like marriage loans, highway construction, rearmament and public work creation, serving as natural experiments in order to evaluate short- and long-run impacts of government expenditure. The constellation after the Great Depression speak to our current circumstances since interest rates were at the zero-lower bound in a fixed exchange rate regime.
The literature estimating the effects of government spending experienced a renaissance since the Great Recession. While especially advances had been pushed forward in terms of identification through regional data, still little is known on the particular effects of distinct spending groups. Most prominently one could simply divide between government spending on consumption and on investment. At this point German interwar data steps in with two examples on each spending category: the German highway construction for public investment, the rearmament efforts for government consumption. A vast majority of data of the first group is broken down to a sub-national level providing historical evidence for modern macro questions. My research makes use of panel data on highway construction spending in order to estimate regional multipliers and thus answers questions on the short- and long-run effects of public investment.
Read Hendrik Steinbrecher's CV here: Hendrik Steinbrecher CV