Paul Bouscasse will present "Canst Thou Beggar Thy Neighbour? Evidence from the 1930s".

Does an exchange rate depreciation depress trading partners’ output? The author addresses 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.  Paul Bouscasse uses 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.