Working Paper: CEPR ID: DP17892
Authors: Jagjit S. Chadha; Jason Lennard; Solomos Solomou; Ryland Thomas
Abstract: This paper investigates the degree of pass-through from import prices and tariffs to wholesale prices in interwar Britain using a new high-frequency micro data set. The main results are: (i) Pass-through from import prices and tariffs to wholesale prices was economically and statistically significant. (ii) Despite devaluation, import prices exacerbated deflation in the early 1930s because of the global slump in export prices. (iii) Rising protection, however, was a mild stimulus to prices during the shift to inflation.
Keywords: exchange rates; interwar; passthrough; prices; tariffs; United Kingdom
JEL Codes: E31; F13; N14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| import prices (P22) | wholesale prices (L42) |
| tariffs (F13) | wholesale prices (L42) |
| falling import prices (F14) | deflation (E31) |
| rising protection through tariffs (F52) | upward pressure on prices (E64) |
| upward pressure on prices (E64) | transition from deflation to inflation (E31) |