Working Paper: NBER ID: w15475
Authors: Alan M. Taylor
Abstract: The Great Depression ushered in a long era of deglobalization that lasted for many decades. An old conventional wisdom (e.g. Polanyi) argues that the common aspect of this shock across all countries, a deep depression, can explain the large and persistent global shift away from orthodox liberal economic policies--including, for example, the collapse of free trade. Yet there is substantial unexplored variation, since not all countries experienced the same depth of shock in the 1930s. Hence, if the "policy path dependence" argument is correct, we should be able to detect it using this variation. Those countries with deeper slumps ought to have seen policy shifts that were larger and more persistent. A fuller economic history of the reglobalization of the postwar period should confront this question, and we present some preliminary evidence for the path dependence hypothesis.
Keywords: No keywords provided
JEL Codes: N10; N40; N70
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Severity of the Great Depression (N13) | Protective trade policies in the 1970s (F13) |
| Depth of the Great Depression (N12) | Timing of trade liberalization (F13) |
| Output loss in the 1930s (N13) | Trade taxes in the 1970s (F14) |
| Institutional memory of the Great Depression (B15) | Resistance to liberalization (F69) |