Southern Economic Journal
Journal Article

Trade Barriers and the Collapse of World Trade during the Great Depression

Jakob B. Madsen
Southern Economic Journal
Vol. 67, No. 4 (Apr., 2001), pp. 848-868
Published by: Southern Economic Association
DOI: 10.2307/1061574
Stable URL: http://www.jstor.org/stable/1061574
Page Count: 21

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Topics: Tariffs, Trade barriers, Imports, Nontariff barrier, Coefficients, Income estimates, International trade, Import prices, Competitiveness, Statistical estimation
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Abstract

Using panel data estimates of export and import equations for 17 countries in the interwar period, this paper estimates the effects of increasing tariff and nontariff trade barriers on worldwide trade over the period 1929 to 1932. The estimates suggest that real world trade contracted approximately 14% because of declining income, 8% as a result of discretionary increases in tariff rates, 5% owing to deflation-induced tariff increases, and a further 6% because of the imposition of nontariff barriers. Allowing for feedback effects from trade barriers on income and prices, discretionary impositions of trade barriers contributed about the same to the trade collapse as the diminishing nominal income.

Notes and References

This item contains 36 references.

[Footnotes]
  • 5
    Warren and Pearson (1937, Ch. 4)
  • 7
    Orcutt 1950 for references
  • 9
    This reference contains 3 citations:
    • Goldstein and Khan 1985
    • Madsen (1998
    • 1999
  • 10
    Crucini and Kahn (1996)
  • "
    This reference contains 5 citations:
    • MaGee, Brock, and Young 1989
    • MaGee, Brock, and Young (1989) find that 75% of the variation in the U.S. macro tariff rate over the period 1900 to 1982 can be explained by endogenous tariff variables, namely the rate of unemployment, inflation, and terms of trade. They find that the Hawley-Smoot tariff increase was smaller than predicted by their endogenous tariff model, and therefore that the tariff increase was lower than it could have been (p. 24)
    • Svenska Handelsbanken 1933
    • Eichengreen 1989
    • Kindleberger 1989
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