Working Paper: NBER ID: w15142
Authors: Barry Eichengreen; Douglas A. Irwin
Abstract: The Great Depression was marked by a severe outbreak of protectionist trade policies. But contrary to the presumption that all countries scrambled to raise trade barriers, there was substantial cross-country variation in the movement to protectionism. Specifically, countries that remained on the gold standard resorted to tariffs, import quotas, and exchange controls to a greater extent than countries that went off gold. Gold standard countries chose to maintain their fixed exchange rate and reduce spending on imports rather than allow their currency to depreciate. Trade protection in the 1930s was less an instance of special interest politics than second-best macroeconomic policy when monetary and fiscal policies were constrained.
Keywords: Great Depression; Protectionism; Trade Policy; Gold Standard
JEL Codes: F02; F13; F31; F42; N70
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Gold Standard (E42) | Trade Protectionism (F13) |
| Fixed Exchange Rates (F31) | Trade Restrictions (F14) |
| Abandoning Gold Standard (F33) | Expansionary Monetary Policies (E52) |
| Abandoning Gold Standard (F33) | Decreased Trade Protectionism (F13) |
| Gold Standard (E42) | Increased Tariffs, Quotas, and Exchange Controls (F31) |
| Fixed Exchange Rate (F31) | Balance of Payments Management (F32) |
| Trade Restrictions (F14) | Rising Unemployment (F66) |
| Gold Standard (E42) | Increased Tariffs (F19) |
| Abandoning Gold Standard (F33) | Fewer Trade Restrictions (F19) |