Currency devaluations and beggar‐my‐neighbour penalties: evidence from the 1930s

Research output: Contribution to journalArticle

Abstract

The currency devaluations of the 1930s facilitated a faster recovery from the Great Depression in the countries depreciating, but their unilateral manner provoked retaliatory and discriminatory commercial policies abroad. This article explores the importance of the retaliatory motive in the imposition of trade barriers by gold bloc countries during the 1930s and its effects on trade. Relying on new and existing datasets on the introduction of quotas, tariffs, and bilateral trade costs, the quantification of the discriminatory response suggests that these countries imposed significant beggar‐my‐neighbour penalties. The penalties reduced trade to a similar degree that modern regional trade agreements foster trade. Furthermore, the analysis of contemporary newspapers reveals that the devaluations of the early 1930s triggered an Anglo‐French trade conflict marked by tit‐for‐tat protectionist policies. With regards to global trade, the unilateral currency depreciations came at a high price in political and economic terms. These costs must have necessarily reduced their benefit to the world as a whole.

Details

Authors
External organisations
  • Humboldt University of Berlin
Research areas and keywords

Subject classification (UKÄ) – MANDATORY

  • Economic History
Original languageEnglish
JournalEconomic History Review
Publication statusE-pub ahead of print - 2019
Publication categoryResearch
Peer-reviewedYes
Externally publishedYes