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Exchange Rates and Economic Recovery in the 1930s

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  • Eichengreen, Barry
  • Sachs, Jeffrey

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.

Suggested Citation

  • Eichengreen, Barry & Sachs, Jeffrey, 1985. "Exchange Rates and Economic Recovery in the 1930s," The Journal of Economic History, Cambridge University Press, vol. 45(4), pages 925-946, December.
  • Handle: RePEc:cup:jechis:v:45:y:1985:i:04:p:925-946_03
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    References listed on IDEAS

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    1. Eichengreen, Barry J., 1981. "A dynamic model of tariffs, output and employment under flexible exchange rates," Journal of International Economics, Elsevier, vol. 11(3), pages 341-359, August.
    2. Harry G. Johnson, 1953. "Optimum Tariffs and Retaliation," Review of Economic Studies, Oxford University Press, vol. 21(2), pages 142-153.
    3. Peter Temin, 1971. "The Beginning of the Depression in Germany," Economic History Review, Economic History Society, vol. 24(2), pages 240-248, May.
    4. Eichengreen, Barry, 1984. "Central bank cooperation under the interwar gold standard," Explorations in Economic History, Elsevier, vol. 21(1), pages 64-87, January.
    5. Peden, G C, 1980. "Keynes, the Treasury and Unemployment in the Later Nineteen-Thirties," Oxford Economic Papers, Oxford University Press, vol. 32(1), pages 1-18, March.
    6. Meltzer, Allan H., 1976. "Monetary and other explanations of the start of the great depression," Journal of Monetary Economics, Elsevier, vol. 2(4), pages 455-471, November.
    7. Michael Bruno & Jeffrey D. Sachs, 1985. "Economics of Worldwide Stagflation," NBER Books, National Bureau of Economic Research, Inc, number brun85-1, June.
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