The Great Depression is the canonical case of a widespread currency war, with more than 70 countries devaluing between 1929 and 1936. Existing scholarship, however, has largely focused on the beggar-thy-neighbor effects of devaluations rather than their collective effect on the disintegration of the interwar gold standard. We use newly-compiled, high-frequency bilateral trade data and gravity models that account for when and whether trade partners had devalued to identify the effects of the currency war on global trade. Our empirical estimates show that a country’s trade was reduced by more than 21% following devaluation relative to its trade partners that had yet to devalue. This negative and statistically significant decline in trade suggests that the currency war destroyed the trade-enhancing benefits of the global monetary standard, ending regime coordination and increasing trade frictions.
currency_wars.pdf
ABSTRACT
How do domestic and global factors shape governments’ capacity to issue debt in primary capital markets? Consistent with the ‘democratic advantage’, we identify domestic institutional mechanisms, including executive constraints and policy transparency, that facilitate debt issuance rather than electoral events. Most importantly, we argue that the democratic advantage is contingent: investors’ attention to domestic politics varies with conditions in global capital markets. When global financial liquidity is low, investors are risk-averse, and political risk constrains governments’ capacity to borrow. But when global markets are flush, investors are risk-tolerant and less sensitive to political risk. We support our argument with new data on 245,000 government bond issues in primary capital markets – the point at which governments’ costs of market access matter most – for 131 sovereign issuers (1990–2016). In doing so, we highlight the role of systemic factors, which are under-appreciated in much ‘open economy politics’ research, in determining access to capital markets.
ballard-rosa_mosley_wellhausen_2021_contingent_advantage_-_sovereign_borrowing_democratic_institutions_and_global_capital_cycles.pdf
What drives autocrats to default on their sovereign debt? This article de- velops the first theory of sovereign debt default in autocracies that explicitly investigates survival incentives of political actors in nondemocracies. Self-interested elites, fearful of threats to their tenure because of urban unrest, may be willing to endure the long-term borrowing costs that defaulting creates rather than risk the short-term survival costs of removing cheap food policies for urban consumers. I test my main claims that both ur- banization and food imports should be associated with greater likelihood of autocratic default using panel data covering forty-three countries over fifty years, finding that autoc- racies that are more reliant on imported food and that are more urbanized are significantly more likely to be in default on their external sovereign debt. I emphasize the regime- contingent nature of these effects by demonstrating that they are reversed when consid- ering democratic sovereign default. I also substantiate the mechanisms put forward in my theory through illustrative historical cases of sovereign debt default in Zambia and Peru, in which I demonstrate that fear of urban unrest in the face of rapidly increasing food prices did indeed drive autocratic elites to default on international debt obligations. In addition to providing the first political theory of debt default in autocracies, the article introduces two robust predictors of autocratic default that have been overlooked in previous work, and highlights the importance of urban-rural dynamics in nondemocratic regimes.
ballard-rosa_2016_hungry_for_change_-_urban_bias_and_autocratic_default.pdfThis paper sheds new light on two questions: How do people perceive and understand trade and trade policy, and what shapes their support for different trade policies? Despite extensive research documenting the efficiency gains from trade and its distributional impacts on different groups of workers, firms, and consumers, we still need to uncover how people perceive these various effects of trade. Trade involves many trade-offs,. When forming their views on trade policy, people have to balance their roles as consumers and workers, consider both personal and broader economic and societal impacts, and evaluate concerns of efficiency and equity. Which of these considerations matters most? Using new large-scale surveys and experiments, I highlight three main findings. First, while earlier work has established that consumer gains from trade are diffuse and job losses are concentrated, I directly show the impact of these two considerations on people’s views about trade. I find that perceived job risks matter more for policy views than perceived consumer gains. Second, beyond their own material self-interest, people care about the broader efficiency gains and adverse distributional consequences from trade. Support for free trade is best predicted by the belief that trade generates efficiency gains. Concerns about the adverse distributional consequences of trade do not necessarily reduce support for free trade: instead, they increase support for compensatory redistribution. These results also highlight the importance of compensatory redistribution as an indissociable part of trade policy in people’s minds. Third, personal exposure to trade shapes policy views in two ways: directly (through self-interest) and indirectly by changing people’s perceptions of trade’s broader efficiency and distributional implications.
understanding_trade_stantcheva.pdf
This paper studies how people across the world perceive and understand climate change and climate policies, which factors determine their support for climate action, and what type of information shifts their policy views. We design and run new large- scale surveys on more than 40,000 respondents in 20 countries, covering the major greenhouse gas emitters in developed and developing economies. We thus provide new, comprehensive, international microdata on people’s perceptions, understanding, and policy views related to climate change, combined with detailed background information on their socioeconomic characteristics, energy use, and lifestyles. We show that, across countries, support for climate policies hinges on three key perceptions centered around the effectiveness of the policies in reducing emissions (effectiveness concerns), their distributional impacts on lower-income households (inequality concerns), and their impact on the respondents’ household (self-interest). In the experimental part, we show randomly selected subsamples pedagogical videos on either the impacts of climate change in their country or how major climate policies work – their effectiveness in reducing emissions and their distributional implications. Explaining how policies work and who can benefit from them is critical to fostering policy support, whereas simply informing people about climate change’s impacts is ineffective.
international_attitudes_toward_climate_change.pdfWe document the outbreak of a trade war after the United States adopted the Smoot-Hawley tariff in June 1930. U.S. trade partners initially protested, with many eventually choosing to retaliate with tariffs. Using a new quarterly dataset on bilateral trade for ninety-nine countries, we show that U.S. exports to retaliators fell by 28%–32%. Using a second new dataset on U.S. exports at the product level, we find that the most important U.S. exports to retaliating markets were particularly affected, suggesting a possible mechanism whereby the United States was targeted despite most-favoured-nation obligations. The retaliators’ welfare gains from trade fell by 8%–16%.
31_ej_smoot-hawley_trade_war.pdf