Citation:
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Abstract:
This study argues that an important part of the explanation for international economic outcomes during the interwar years arose from the internal politics and institutions prevalent within many countries after the Great War. In the face of balance of payments deficits, governments could choose to adjust internally by reducing prices and demand, or adjust externally with "beggar–thy–neighbor" policies that pushed the problem of adjustment onto a country's trade partners. Is there a political explanation for the choice of adjustment strategy? To answer this question I draw on theoretical work that has developed the logic of strategic behavior – the temptation to dump currencies that are likely to be devalued, the logic of competitive devaluation, the individual rationality of tariff retaliation – but go beyond these by testing for the political conditions associated with the decision to defect from the gold standard and liberal trade...