International trade

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Monograph

Identifikator:: 1758394757

URN:: urn:nbn:de:zbw-retromon-136209

Document type:: Monograph

Author:: Taussig, Frank William http://d-nb.info/gnd/120199459

Title:: International trade

Place of publication:: New York, NY

Publisher:: Macmillan

Year of publication:: 1927

Scope:: XXI, 425 Seiten; graph. Darst.

Digitisation:: 2021

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Part III. International trade under inconvertible paper

Collection:: Economics Books

THE UNDERLYING PRINCIPLES 349 are, of course, domestic articles as regards the conditions of supply and of long-period price. But during the stage of readjustment, during the lag, exported articles will be somewhat higher in price than before in Great Britain, somewhat lower than before in the United States. Eventually, it is to be expected that exported articles in both countries will return to their former level ; the only persisting change in both will be in the prices of imported articles.! Consider how these changes would affect an index number of the usual kind, made up from the prices of a miscellaneous assort- ment of goods — domestic, exported, imported. Such an index would show one sort of result during the period of readjustment, another when that period was past and things had settled down. In the United States the index number will register during the period of readjustment a fall in prices. Imported goods will be cheaper as the immediate consequence of the new rate of foreign exchange. Exported goods also will be cheaper. Domestic goods will be unchanged. The general price level will thus be shown by the index to be lower. As time goes on, the exported goods will no longer show a fall in price, i.e. the initial fall will be succeeded by a rebound to the original figures. Their producers will be led to lessen supplies in such way that the returns to them will be as great as to other domestic producers. But imported goods will have fallen in price definitively. When all has settled down, the general price level in the United States will be lower than it was before the disturbing influence set in, domestic prices (including those of exported goods) being the same as before but the prices of imported goods lower. In Great Britain the other way. During the period of readjust- ment exported goods will be higher in prices than before ; imported goods will also be higher; domestic goods will show no change. ! Lest there be misunderstanding, IT would remind the reader that, for simplicity, various assumptions are tacitly made, as they have been in previous chapters. For example, constant costs are assumed, no individual domestic commodity being affected in price by the circumstance that under altered conditions of demand more or less of it is produced; no commodity shifts from the export to the import list under altered barter terms; and so on. Such assumptions may be made without affecting the validitv of the present conclusions.

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