Читать книгу Economics of G20 - Группа авторов - Страница 15

The world economy was turbulent through much of the inter-war period. Rates of unemployment were high for sustained periods of time. Unemployment in the UK was over 20% in 1933 (Laybourn, 1999). Between 1920 and 1939, in only 2 years was it less than 10%.² In the US, it was over 10% in 1921, 1922 and 1930–1938, at times reaching almost a third (Eichengreen and Hatton, 1988). It the case of Germany, it averaged almost 19% between 1923 and 1936.

There was monetary instability. There was inadequate liquidity as the US which held the majority of the world’s gold ran surpluses and continued to add to these holdings. The shortage of gold in other countries meant that their currencies were not convertible into other currencies or into reserve assets. There were also persistent imbalances in the balance of payments (BOP). These problems were further complicated by the issue of war debts. These included reparations to be paid mainly by Germany and the debts of many of the victorious allies to the UK and of the UK and some of the allied to the US. Furthermore, there was the issue of establishing central banks and systems of monetary management in the countries newly established after the breakup of the Austro-Hungarian Empire.

Policymakers desired to fix exchange rates (ERs) to stabilise expectations and encourage investments that would increase output and preferably exports. But countries were reluctant to fix their ERs as it was not clear what they should be given the inflation that had occurred during the war and its immediate aftermath. As a consequence, ERs fluctuated considerably, which created uncertainties in the minds of exporters and investors. Countries moved on to the gold standard (GS) as soon as they could in the expectation that this would improve the situation. But this required governments to manage the public accounts responsibly, i.e. not run large deficits. But cutbacks in public expenditures had a recessionary effect on the economy.

The countries cooperated at various levels to resolve these issues. The major areas where cooperation was attempted were as follows: (i) establishment of central banks in the newly independent countries, (ii) reparations and (iii) economic recovery, fundamentally centred around ER stability. As we shall see in the subsequent sections, some of these attempts succeeded. Cooperation was most successful in tackling the problems of establishing central banks in the newly independent countries and in tackling the problem of reparations. It was much less successful in tackling the broader macroeconomic issues.