Bank of Italy publishes working paper reviewing how 1930s protectionism worsened the Great Depression and geopolitical tensions

The Bank of Italy has made available Economic History Working Papers No. 57, “Protectionism in the 1930s: a brief history of a Trade Policy Disaster”, which reviews the interwar experience to frame recent trends toward protectionist policies. The paper reconstructs the trade restrictions introduced after 1929 and assesses their macroeconomic and geopolitical impact. It finds that protectionism, largely aimed at preserving fixed exchange rates under the gold standard, was not the main driver of the Great Depression but did exacerbate and prolong it, while also contributing to deteriorating international relations and the formation of autarkic economic blocs, especially in countries with authoritarian regimes.