Exchange Rates and Economic Recovery in the 1930s

Barry Eichengreen and Jeffrey Sachs

The Journal of Economic History, 1985, vol. 45, issue 4, 925-946

Abstract: Currency depreciation in the 1930s is almost universally dismissed or condemned. This paper advances a different interpretation of these policies. It documents first that depreciation benefited the initiating countries. It shows next that there can be no presumption that depreciation was beggar-thy-neighbor. While empirical analysis indicates that the foreign repercussions of individual devaluations were in fact negative, it does not imply that competitive devaluations taken by a group of countries were without mutual benefit. To the contrary, similar policies, had they been even more widely adopted and coordinated internationally, would have hastened recovery from the Great Depression.

Date: 1985
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Working Paper: Exchange Rates and Economic Recovery in the 1930s (1984)
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