Notes on Professor Hicks’s model of the dollar problem

Abstract

Professor Hicks has performed a most useful service in starting a careful discussion of these matters and by his insistence on the need to consider seperately the different types of industry in the U.S. and in the rest of the world, or in whatever two areas are being considered. The present author has certainly found his ‘Lecture’ one of the most stimulating treatments of this general subject. Professor Hicks’s main concern is perhaps the analysis of changes in the terms of trade, and we suggested in Chapter I² that these may be rather unimportant, in the long run, for the U.S. and for the rest of the world as a whole (although this would not necessarily be true of other problems to which Professor Hicks’s model could be applied). He also considers, in the course of his argument, changes in the balance of trade resulting from various possible changes in productivity and money incomes, but it does not seem possible to use his model as it stands as a framework for the empirical studies in this book. Some reasons are given in these notes, which are not intended to be a comprehensive critique of Professor Hicks’s ‘Lecture’.

Appendix VIC of The World Dollar Problem 1957, commenting on Hicks’s Inaugural Lecture, Oxford Economic Papers, June 1953. Several of the points mentioned here are contained in a article by Mr. E. J. Mishan (Oxford Economic Papers, June 1955) which appeared after this Study had been prepared.