Working Paper: NBER ID: w1440
Authors: Barry Eichengreen
Abstract: This paper examines the international financial relations of the interwar period to see what light this experience sheds on current concerns over international policy coordination. The analysis proceeds in three parts. The first part considers the role for policy coordination as viewed by contemporaries at the start of the period; it takes as a case study the Genoa Economic and Financial Conference of 1922. Efforts at Genoa to coordinate policies ended in failure; the second part therefore considers the effects of noncooperative strategies within the framework of the interwar gold standard. The analytical model developed in this section suggests that the failure to coordinate policies lent a deflationary bias to the world economy which may have contributed to the on set of the Great Depression. The third part asks what policymakers learned from this failure to coordinate policies, taking evidence from the next effort to establish a framework for international financial collaboration: theTripartite Monetary Agreement of 1936.
Keywords: international policy coordination; interwar period; gold standard; economic history; monetary policy
JEL Codes: N01; F33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Lack of policy coordination during the interwar years (F42) | Deflationary bias in the world economy (E31) |
| Competitive scramble for gold among nations (N13) | Adverse economic outcomes (including unemployment and deflation) (E31) |
| Non-cooperative behavior among nations (D74) | Deflationary pressures (E31) |
| Lessons learned from the interwar experience (N44) | Later attempts at policy coordination (E61) |
| Recognition of interdependence among nations (F52) | More structured efforts for cooperation (F55) |