Abstract
We shall read much in this book about the adjustment problem. This chapter is a frontal attack upon that problem. In it we shall look at some theoretical considerations; in the next chapter we shall examine some of the policy problems which countries encounter in seeking adjustment.
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Notes
The full exposition and proof of this so-called Marshall-Lerner condition will not be reproduced here. It has been fully expounded and discussed in many books and articles. Useful treatments are: C. P. Kindleberger, International Economics, 4th ed. (Homewood Ill.: Irwin, 1968) pp. 259–62;
W. M. Scammell, International Monetary Policy, 2nd ed, (London: Macmillan, 1961) pp. 62–75, and International Trade and Payments (London: Macmillan, 1974) pp. 302–17.
Thus far the account of absorption has followed closely the arguments of its originator Alexander (cf. p. 45 above). What follows is an account of the development of Alexander’s ideas by others, predominantly H. G. Johnson in ‘Towards a General Theory of the Balance of Payments’, International Trade and Economic Growth: Studies in Pure Theory (Cambridge, Mass.: Harvard University Press, 1961) pp. 153–68.
The exposition here makes use of the famous series of diagrams presented by Trevor Swan in his article ‘Longer-Run Problems of the Balance of Payments’, in Readings in International Economics, ed. R. Caves and H. G. Johnson. (Homewood, Ill.: Irwin, 1968) ch.27.
Robert Mundeil, International Economics (New York: The Macmillan Company, 1968), ch. 16, also ‘The Appropriate Use of Monetary and Fiscal Policy under Fixed Exchange Rates’, IMF Staff Papers (March 1962).
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© 1975 W. M. Scammell
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Scammell, W.M. (1975). The Methods of Adjustment: Theory. In: International Monetary Policy. Palgrave, London. https://doi.org/10.1007/978-1-349-86171-2_3
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DOI: https://doi.org/10.1007/978-1-349-86171-2_3
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