Canst Thou Beggar Thy Neighbour? Evidence from the 1930s
Does an exchange rate depreciation depress trading partners’ output? I address this question through the lens of a classic episode: from 1931 to 1936, the largest economies in the world successively devalued their currency. In theory, the effect is ambiguous for countries that had not devalued: expenditure switching can lower their output, but the monetary stimulus to foreign demand might raise it. I use cross-sectional evidence to discipline the strength of these two mechanisms in a multi-country model. Contrary to the popular narrative in modern policy debates, devaluation did not dramatically lower the output of trading partners in this context.
Date: 28 November 2023, 13:15 (Tuesday, 8th week, Michaelmas 2023)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Seminar Room A or https://zoom.us/j/99960790792?pwd=L01NVnBQcGlqMVdQMHBiWDN3YmFMZz09
Speaker: Paul Bouscasse (Sciences Po)
Organising department: Department of Economics
Part of: Macroeconomics Seminar
Booking required?: Not required
Audience: Members of the University only
Editor: Shreyasi Banerjee