1. Introduction The contraction in world during the first phase of the Great Depression stands out the strongest adverse shock to international in modern history. From 1929 to 1932 world import and export volume in the industrialized nations decreased about 30%. However, it is not well understood which factors were responsible for the collapse. The factors that have been highlighted in the literature are declining demand, escalating tariff and nontariff barriers, increasing bilateral agreements, and international exchange rate policies. The importance attributed to each of these factors has often been controversial. Pollard (1962, p. 200) for instance argues that for Britain the fall in total foreign a proportion of home production was a part of a secular trend, and may well not have been caused the tariff such. By contrast, Khan (1946, p. 246) claims that, within 12 to 18 months, UK nominal imports of manufactures from most of Europe and the United States were reduced something like 60% as a result of the tariff. Similarly, Saint-Etienne (1984, p. 29) argues that by the mid-1930's, international had become, in large proportion, barter trade a result of the tariffs and nontariff barriers. Empirical studies have examined the effects of restrictions on incomes to explain the declining for individual countries. The studies of Crucini and Kahn (1996) and Irwin (1998) find that the tariffs were influential for the U.S. imports and exports. In his study of nominal imports to the European countries, Friedman (1974) quantified the effects of barriers on nominal imports, and ultimately income, means of dummies in periods of significant tariffs and nontariff barriers. He found that restrictions had a significant impact on in a few countries. However, Friedman himself acknowledges, the weakness of this approach is that strong and weak forms of barriers are restricted to impact equally on imports in the estimates. Coupled with the small sample problems that plagued his estimates, the trade-barrier dummies were unlikely to effectively have captured the effects of barriers on imports, which explains substantial variations of the estimated effects of the tariffs and the nontariff barriers across countries. The study of Eichengreen and Irwin (1995) is probably the most extensive analysis of flows in the interwar period. Using 561 cross-sectional bilateral flows over three periods (1928, 1935, and 1938) they estimate a gravity model of patterns. They relate the value of bilateral flows to national income, population, distance, contiguity, and currency block indicators, and exchange rate variability, to examine the effects on of and currency blocks, and exchange rate variability. They observe a declining marginal propensity to import and export during the Depression, which they attribute to quotas and other binding restrictions, but do not formally test their importance. This paper seeks to estimate the contribution of income, tariffs, and nontariff barriers on world during the Depression using panel data for 17 countries over the period from 1920 to 1938. The panel data approach enables the assessment of the influence on of nontariff barriers from estimates of import and export functions, using an identifying assumption that the nontariff barriers were to some degree simultaneously imposed and relaxed across the industrialized nations during the interwar period. The estimates and extensive evidence from the literature suggest that this identifying assumption is valid (section 3). In section 4 the changes in world in the interwar period are decomposed into income effects, tariff effects, and nontariff barrier effects. The effects of the tariff changes are furthermore decomposed into deflation/ inflation-induced tariff changes and discretionary tariff-induced changes. …