IESET.
Hypotheses·monetary·austrian_v_recovery_us_1920_no_fiscal_stim_canonical

The 1920-1921 US depression — a sharp post-WW1 contraction featuring industrial production collapse on the order of 30% and unemployment rising above 10% — was followed by a rapid V-shaped recovery within approximately 18 months, despite the Harding administration cutting federal spending by roughly half over 1920-1922 and the Federal Reserve raising rather than lowering policy rates through much of 1920.

The Austrian/laissez-faire reading (Rothbard, Grant, Woods) is that this is the canonical case of a recession allowed to clear via liquidation of malinvestment without either fiscal stimulus or monetary accommodation, demonstrating that recovery can proceed rapidly without the Hoover/FDR-style intervention paradigm. Pre- registered claim is that across at least 4 of 5 canonical metrics (GDP, industrial production, unemployment, federal-spending change, policy-rate stance) the 1920-1921 episode meets the "rapid recovery without stimulus" pattern.

INCONCLUSIVEengine/runs/austrian_v_recovery_us_1920_no_fiscal_stim_canonical

INCONCLUSIVE_DATA_PENDING — insufficient observations after listwise deletion (7)

confidence cueResult card produced; verdict unclassified.

policy briefCoverage too thin

In ordinary language

In plain terms, this asks whether federal outlays share income is actually linked to better or worse real income index from 1918 to 1925.

plain answer

This test cannot make a firm call yet. insufficient observations after listwise deletion (7)

why it matters

This matters because monetary claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 1 country or place units from 1918 to 1925, using a multi metric checklist design.

what was measured
What changed
  • Federal outlays share income
  • Fed discount rate
What we checked
  • Real income index
  • Industrial production index
  • Unemployment rate
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

No evidence packet has been generated yet.

Results

engine/runs/austrian_v_recovery_us_1920_no_fiscal_stim_canonical
1007550250191819221925USA
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show real_gdp_index across 1 sampled countries over 1918–1925.
The shapes above are stylised — none of the lines are real data.
Placeholder for austrian_v_recovery_us_1920_no_fiscal_stim_canonical. Published chart will be generated from engine/runs/austrian_v_recovery_us_1920_no_fiscal_stim_canonical/chart_data.json.

Pre-registration

registration ordering unverified
first-spec commit 4c8ce8e · 2026-07-18T22:11:21Z
run generated · 2026-06-29T17:52:01Z
Run timestamp predates this path's first git-add commit (rebase, rename, or pre-git local run). Spec hash is still the path's first-add commit — not repository HEAD — but ordering is not a clean pre-registration proof.

The 1920-1921 US depression — a sharp post-WW1 contraction featuring industrial production collapse on the order of 30% and unemployment rising above 10% — was followed by a rapid V-shaped recovery within approximately 18 months, despite the Harding administration cutting federal spending by roughly half over 1920-1922 and the Federal Reserve raising rather than lowering policy rates through much of 1920. The Austrian/laissez-faire reading (Rothbard, Grant, Woods) is that this is the canonical case of a recession allowed to clear via liquidation of malinvestment without either fiscal stimulus or monetary accommodation, demonstrating that recovery can proceed rapidly without the Hoover/FDR-style intervention paradigm. Pre- registered claim is that across at least 4 of 5 canonical metrics (GDP, industrial production, unemployment, federal-spending change, policy-rate stance) the 1920-1921 episode meets the "rapid recovery without stimulus" pattern.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

Hypothesis is supported if at least 4 of 5 canonical metrics meet their thresholds; refuted if 2 or fewer meet thresholds. A clean refutation would show e.g. either GDP did not recover within 18mo, OR federal spending did not fall, OR the Fed did materially loosen during the contraction itself.

formal test & threshold
test:      rapid_recovery_without_stimulus_pattern_count
threshold: metrics_met >= 4 of 5 → supported metrics_met <= 2 of 5 → refuted

Method

Template
multi_metric_checklist
Sample
1 countries · 1918 – 1925
Evidence type
canonical_case_multi_metric

Pre-registered checklist of canonical Austrian-claim metrics for the 1920-1921 episode. The hypothesis is an existence claim ("a rapid V-shaped recovery without stimulus did happen in this canonical case"), not a causal generalisation. Heterodox/Keynesian objections (de Long, Krugman) argue (a) the recovery was not as rapid as Austrian retellings claim, (b) underlying conditions differed enormously from 1929 or 2008, (c) the Fed cut rates from 7% to 4% over 1921-1922 — i.e. did substantially loosen — and (d) 1920-1921 was a postwar reconversion shock, not a credit-boom bust. The multi-metric checklist tests pattern, not causal generalisability.

Data

VariableSourceTransform
real_gdp_index
outcome
maddison:gdp_per_capita_2011usdtier 3
log
industrial_production_index
outcome
fred:INDPROtier 1
log
unemployment_rate
outcome
academic:lebergott_1957_unemployment_seriestier 4
level
federal_outlays_share_gdp
treatment
fred:FYONGDA188Stier 1
level
fed_discount_rate
treatment
fred:M13009USM156NNBRtier 1
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — austrian_v_recovery_us_1920_no_fiscal_stim_canonical

Verdict: INCONCLUSIVE_DATA_PENDING — insufficient observations after listwise deletion (7)

Pre-registration

  • Claim: The 1920-1921 US depression — a sharp post-WW1 contraction featuring industrial production collapse on the order of 30% and unemployment rising above 10% — was followed by a rapid V-shaped recovery within approximately 18 months, despite the Harding administration cutting federal spending by roughly half over 1920-1922 and the Federal Reserve raising rather than lowering policy rates through much of 1920. The Austrian/laissez-faire reading (Rothbard, Grant, Woods) is that this is the canonical case of a recession allowed to clear via liquidation of malinvestment without either fiscal stimulus or monetary accommodation, demonstrating that recovery can proceed rapidly without the Hoover/FDR-style intervention paradigm. Pre- registered claim is that across at least 4 of 5 canonical metrics (GDP, industrial production, unemployment, federal-spending change, policy-rate stance) the 1920-1921 episode meets the "rapid recovery without stimulus" pattern.
  • Falsification rule: Hypothesis is supported if at least 4 of 5 canonical metrics meet their thresholds; refuted if 2 or fewer meet thresholds. A clean refutation would show e.g. either GDP did not recover within 18mo, OR federal spending did not fall, OR the Fed did materially loosen during the contraction itself.
  • Falsification test: rapid_recovery_without_stimulus_pattern_count

Estimate

  • Error: insufficient observations after listwise deletion (7)

Variables resolved

  • fred:INDPRO → industrial_production_index (outcome, publisher=fred, n=108)
  • fred:FYONGDA188S → federal_outlays_share_gdp (treatment, publisher=fred, n=97)
  • fred:M13009USM156NNBR → fed_discount_rate (treatment, publisher=fred, n=56)

Variables missing data

  • maddison:gdp_per_capita_2011usd (outcome, name=real_gdp_index) — vintage not on disk
  • academic:lebergott_1957_unemployment_series (outcome, name=unemployment_rate) — vintage not on disk

Generated by scripts/run_panel_fe.py at 2026-06-29T17:52:01+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Rothbard (1963 America's Great Depression, ch.10), Grant (2014 The Forgotten Depression), Woods (2009 Meltdown). Mainstream rejoinder: Romer 1988, de Long-Eichengreen historical macro, Krugman columns. This is one of the most-cited Austrian canonical cases; the framework treats it as "pattern in the data, not generalisable lesson."

Authored framework. Read the transparency note.