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Export-Led Decay: The Trade Channel in the Gold Standard Era

Author

Listed:
  • Bernardo Candia
  • Mathieu Pedemonte

Abstract

Flexible exchange rates can facilitate price adjustments that buffer macroeconomic shocks. We test this hypothesis using adjustments to the gold standard during the Great Depression. Using novel monthly data on city-level economic activity, sectoral employment, and export data, we show that American exporting cities were significantly affected by changes in bilateral exchange rates. We calibrate a general equilibrium model to obtain aggregate effects from cross-sectional estimates. We show that the trade channel deepened the Great Depression and was a key driver of the economic recovery in 1933.

Suggested Citation

  • Bernardo Candia & Mathieu Pedemonte, 2025. "Export-Led Decay: The Trade Channel in the Gold Standard Era," Journal of the European Economic Association, European Economic Association, vol. 23(3), pages 1173-1201.
    • Handle: RePEc:oup:jeurec:v:23:y:2025:i:3:p:1173-1201.
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    File URL: http://hdl.handle.net/10.1093/jeea/jvae051
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    Cited by:

    1. is not listed on IDEAS
    2. Juan Herreño & Matias Morales & Mathieu Pedemonte, 2023. "The Effect of Local Economic Shocks on Local and National Elections," Working Papers 23-08, Federal Reserve Bank of Cleveland.

    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-

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