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

Albers, Thilo (2019) Currency devaluations and beggar-my-neighbour penalties: evidence from the 1930s. Economic History Review. ISSN 0013-0117

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Identification Number: 10.1111/ehr.12874

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.

Item Type: Article
Official URL: https://onlinelibrary.wiley.com/journal/14680289
Additional Information: © 2019 The Author
Divisions: Economic History
Subjects: H Social Sciences > HG Finance
Date Deposited: 26 Mar 2019 11:45
Last Modified: 12 Oct 2019 23:07
URI: http://eprints.lse.ac.uk/id/eprint/100269

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