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 I. Theory

Collection:: Economics Books

COMPARATIVE COSTS 31 of exchange are unfavorable to the Germans is simply that in physical units more of the German product is given for the Amer- ican than before. In this sense, and in this only, are the barter terms of exchange less favorable to Germany than before. Returning now to the main trend of the argument, we may state as follows the general conclusions which are indicated. The barter terms of trade between the countries depend on their states of demand; on the intensity and elasticity of Germany’s demand for wheat, of America’s demand for linen. The limits within which the terms of trade are confined depend on the range of difference in costs. In the case supposed, 10 of wheat can exchange for any amount of linen between 10 and 15. But the mere analy- sis of the differences in costs indicates nothing about the precise point between the limiting extremes at which the exchange will take place. That depends on the conditions of demand in the two countries. The greater the German demand for wheat, the more likely is it that the terms will be such as to yield Germany less wheat in exchange for her linen; the rate will be nearer 15 than 10. On the same reasoning, the less the elasticity of the German demand for wheat — the more her takings of wheat will persist with little abatement, notwithstanding a rising price of wheat — the more likely it is that the terms of trade will be disadvantageous to her. In the United States the moving forces are the same: the less her demand for linen, and the less easily that demand is stimulated by falling price, the more the terms will be to her advantage.! In the second case supposed above, where the German demand for wheat has increased, the Germans, as the price of wheat begins to rise, will gradually lessen their purchases. But the extent of the check to their purchases will depend on the elasticity of their demand. The more persistent is that demand, the less it is checked by rising price, the greater will be the alter- ation of the terms of trade to Germany's disadvantage. The flow of specie out of Germany will then continue longer than it would if demand were less persistent (i.e. less inelastic), and the fall in I Stated in technical language, and in terms of diagrams, the two factors are the position of the demand curve and the slope of the demand curve.

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