Download e-book for kindle: An Aggregate Theory of International Payments Adjustment by H.Peter Gray

By H.Peter Gray

ISBN-10: 134901768X

ISBN-13: 9781349017683

ISBN-10: 1349017701

ISBN-13: 9781349017706

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The Infrastructure 30 terms of foreign currencies and will be assumed to cause an increase in (reduction of) any balance-of-trade surplus (deficit). C = PI.! PrJ, r where PI and PrJ, are, respectively, indices of prices of tradable goods and r is an index of the rate of exchange defined so that an increase in r represents an appreciation of the currency of the focus nation. In Figure 2-1, tastes and 'normal' levels of tariff protection are Balance of trade {+I T C«C? 4---t---------:::o(IC--------.

The competitive position is conceived of as the ratio of foreign price levels to domestic price levels interrelated by the rate of exchange between the two currencies. 33 The ratio is defined in such a way that an increase in its value will amount to a depreciation of the domestic currency in 31 J. E. Meade, The Balance of Payments (London: Oxford University Press, 1952) p. 15. 32 Harry G. Johnson, 'Towards a General Theory of the Balance of Payments', in International Trade and Economic Growth (London: Geo.

Williamson who defined 'basic adjustments' as those capable of inducing a change in relative international prices that would eliminate or reduce a deficit. The elimination of the deficit in this way would not impede the focus nation in the realisation of its long-run targets because of balance-of-payments measures that lingered on and whose release would cause the deficit to reoccur. In contrast Williamson uses the term 'quasi-adjustments' to describe those measures that will eliminate an imbalance of trade at the cost of a departure from a desired resource allocation, from a given (internal) income distribution or from some achievable level of output.

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An Aggregate Theory of International Payments Adjustment by H.Peter Gray

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