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Devaluation, Exports, and Recovery from the Great Depression

Author

Listed:
  • Jason Lennard

    (London School of Economics (LSE)
    Centre for Economic Policy Research (CEPR)
    Centre for Macroeconomics (CFM)
    Economic Statistics Centre of Excellence)

  • Meredith M. Paker

    (Grinnell College)

Abstract

This paper evaluates how a major policy shift - the suspension of the gold standard in September1931 - affected employment outcomes in interwar Britain. We use a new high-frequency industry-level dataset and difference-in-differences techniques to isolate the impact of devaluation on exporters. At the micro level, we find that the break from gold reduced the unemployment rate by 2.7 percentage points for export-intensive industries relative to more closed industries. At the aggregate level, this effect stimulated the labor market, the fiscal outlook, and economic growth. Devaluation was therefore an important initial spark of recovery from the depths of the Great Depression.

Suggested Citation

  • Jason Lennard & Meredith M. Paker, 2023. "Devaluation, Exports, and Recovery from the Great Depression," Discussion Papers 2403, Centre for Macroeconomics (CFM).
    • Handle: RePEc:cfm:wpaper:2403
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    File URL: https://www.lse.ac.uk/CFM/assets/pdf/CFM-Discussion-Papers-2024/CFMDP2024-03-Paper.pdf
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    References listed on IDEAS

    as
    1. Jason Lennard, 2020. "Uncertainty and the Great Slump," Economic History Review, Economic History Society, vol. 73(3), pages 844-867, August.
    2. Jason Lennard & Finn Meinecke & Solomos Solomou, 2023. "Measuring inflation expectations in interwar Britain," Economic History Review, Economic History Society, vol. 76(3), pages 844-870, August.
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    More about this item

    Keywords

    exports; gold standard; interwar Britain; unemployment;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-

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