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Specie-Flow Mechanism

  • Takashi Negishi
  • Takashi Negishi
Chapter
Part of the Advances in Japanese Business and Economics book series (AJBE, volume 2)

Abstract

The classical economists, who followed Adam Smith, did not doubt that the arguments of their predecessors, the mercantilists, in favor of a chronic export surplus were based on an intellectual confusion. The classical refutation of the mercantilist principle is derived from the so-called Cantillon–Hume price-specie-flow mechanism. By this mechanism an inflow of bullion raises domestic prices, and selling dear and buying cheap tends to turn the balance of trade against the country. Purely automatic forces tend, therefore, to establish a natural distribution of specie between the trading countries of the world and there is a level of domestic prices such that each country’s value of exports equals that of imports.

Keywords

Balance of trade Price-specie-flow mechanism 

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Copyright information

© Springer Japan 2014

Authors and Affiliations

  • Takashi Negishi
    • 1
  • Takashi Negishi
    • 2
  1. 1.The Japan AcademyTokyoJapan
  2. 2.The University of TokyoTokyoJapan

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