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The Myth of Competitive Devaluations in the 1930s

Jonas Ljungberg ()
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Jonas Ljungberg: Department of Economic History, Lund University, Postal: Department of Economic History, Lund University, Box 7083, S-220 07 Lund, Sweden

No 211, Lund Papers in Economic History from Lund University, Department of Economic History

Abstract: Conventional wisdom pretends that currency devaluations contributed to the Great Depression of the 1930s. This paper examines the impact of nominal exchange rates on foreign trade of 14 industrialized countries 1929-1939. If the idea of competitive devaluation holds, one should expect an increase in exports, along with a decline in imports, to trading partners against which the exchange rate epreciated. Tests show that the beggar-thy-neighbour effects of exchange rate adjustments were at most marginal. Moreover, there is evidence that currency depreciations were expansionary not only for countries that devalued but for the international economy as a whole.

Keywords: interwar; Europe; exchange rates; trade; depression (search for similar items in EconPapers)
JEL-codes: E31 E52 F31 N14 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2020-03-05
New Economics Papers: this item is included in nep-cba, nep-his, nep-mac and nep-opm
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:luekhi:0211

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