International trade

Bibliographic data

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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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part III. International trade under inconvertible paper

Collection:: Economics Books

THE UNDERLYING PRINCIPLES 357 to country; and thus the greater are the possibilities that one country will gain markedly thru a high range of money incomes and low prices of imported goods, while another, having high import prices and low money incomes, gains much less. It is not to be gainsaid that there is, in the rough and as a first approximation, a general accordance between the quantity of paper money issued, the advance in prices, and the rates of paper exchange; and thus a rough sort of purchasing-power parity. A doubling or quadrupling of the volume of currency will lead to something like a doubling or quadrupling of prices, and to disturb- ance of exchange rates of similar quantitative character. What is to be questioned is the doctrine of an exact relation, and especially that of a tendency to a long-run exact correspondence. And the important comparison, it must be borne in mind, is be- tween domestic prices and money incomes in the several countries, not between prices measured by an index number made up for all classes of goods, international as well as domestic. It is a mere truism that the prices of international goods tend to fluctuate in close accord with the exchange quotations. The real problem lies in the movements of domestic prices and money incomes. Be- tween these and the exchange rates there are not only temporary discordances (concerning which something will be said in the following chapter) but permanent ones. Divergences may arise, and are likely to arise, between the exchange rates and the general domestic price levels, divergences that rest on deep-seated causes. They are such as to persist however long a time elapses and how- ever completely competition irons out the short-time phenomena. The conclusions that emerge from this prolonged analysis as regard the purchasing-parity doctrine can be summarized in a few words. There is no normal or settled rate of exchange based on purchas- ing-power parity. To be sure, if there be not only the elements of constancy just mentioned, but also constant conditions of de- mand for the exports and imports, and, moreover, constancy in the invisible items, then the purchasing-parity doctrine will hold.

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