If every country’s’ money was suddenly not worth as much, wouldn’t there be no effect? Like if the whole word decided collectively to make everything 50% cheaper, but make peoples pay also lower as well. Wouldn’t the buying power be the same?
In: 65
People had even less money. If goods go down in price, it means the money is seen to be worth relatively more and people hoarded money. That caused even less spending.
Douglas Irwin has a paper about one possible root cause:
https://www.nber.org/papers/w16350
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