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² Robertson, D. H., “A Revolutionist's Handbook,” Quarterly Journal of Economics, 02, 1950.CrossRefGoogle Scholar Reprinted in Robertson, D. H., Utility and All That, and Other Essays (London, 1952), 69–70.Google Scholar

³ Schumpeter, J. S., History of Economic Analysis (New York, 1954), 3, 6, and elsewhere.Google Scholar

⁴ Ellis, H. S., ed., A Survey of Contemporary Economics (Philadelphia, Toronto, 1948), Preface, p. viii.Google Scholar

⁵ Veblen, Thorstein, The Instinct of Workmanship (New York, 1914), 25–37.Google Scholar

⁶ “Symposium on Monetary Policy,” Bulletin of the Oxford University Institpte of Statistics, 1952.Google Scholar

⁷ E.g. Burns, Arthur F., The Instability of Consumer Demand (New York, 1952).Google Scholar

⁸ See Duesenberry, J. S., Income, Savings and the Theory of Consumer Behavior (Cambridge, Mass., 1949)Google Scholar; see also, e.g., Hagen, E. E., “The Reconversion Period: Reflections of a Forecaster,” Review of Economic Statistics, 05, 1947 Google Scholar, which includes a useful bibliography.

⁹ See e.g. Liebenstein, H., “Bandwagon, Snob and Veblen Effects in the Theory of Consumer Demand,” Quarterly Journal of Economics, LXIV, 1950, 183–207 CrossRefGoogle Scholar; Johnson, H. G., “A Note on the Effect of Income-Redistribution on Aggregate Consumption with Interdependence of Consumers' Preferences,” Economica, 1952, 131–47Google Scholar; James, S. F. and Beckerman, W., “Interdependence of Consumer Preferences in the Theory of Income Redistribution,” Economic Journal, LXIII, 1953, 70–83.CrossRefGoogle Scholar

¹⁰ Machlup, F., International Trade and the National Income Multiplier (Philadelphia, 1945)Google Scholar; Metzler, L., “The Transfer Problem Reconsidered,” Journal of Political Economy, 1942, 397–414.CrossRefGoogle Scholar

¹¹ For a comparison of full-employment and other models see Harberger, A. C., “Currency Depreciation and Foreign Trade,” Journal of Political Economy, 02, 1950.CrossRefGoogle Scholar

¹² See e.g. Orcutt, G. H., “Measurement of Price Elasticities in International Trade,” Review of Economics and Statistics, 05, 1950 Google Scholar; and Viner, J., International Trade and Economic Development (Oxford, 1952), 37–41.Google Scholar

¹³ E.g. Graham, F. D., The Theory of International Values (Princeton, N.J., 1948).Google Scholar

¹⁴ Haberler, G., “Some Problems in the Pure Theory of International Trade,” Economic Journal, 03, 1951 Google Scholar; Balogh, T., “Welfare and Freer Trade,” Economic Journal, 03, 1951 CrossRefGoogle Scholar; and Haberler, , “Welfare and Freer Trade: A Rejoinder,” Economic Journal, 12, 1951.CrossRefGoogle Scholar

¹⁵ Meade, J. E., The Balance of Payments (New York, 1951)Google Scholar; and its Mathematical Supplement.

¹⁶ The phrase is used by Baumol, W. J., Economic Dynamics (New York, 1951).Google Scholar

¹⁷ Harrod, R. F., Towards a Dynamic Economics (London, 1948)Google Scholar; Domar, E. D., “The problem of Capital Accumulation,” American Economic Review, 12, 1948 Google Scholar, and “Depreciation, Replacement and Growth,” Economic Journal, 03, 1953.Google Scholar

¹⁸ Johnson, H. G., “Equilibrium Growth in an International Economy,” Canadian Journal of Economics and Political Science, XIX, no. 4, 11, 1953, 478–500.CrossRefGoogle Scholar

¹⁹ Young, Allyn A., “Increasing Returns and Economie Progress,” Economic Journal, 1928, 270–83Google Scholar; for emphasis, on Young's ideas, see Williams, J. H., Economic Stability in a Changing World (Oxford, 1953)Google Scholar, and elsewhere.

²⁰ Ellis, H. S. and Fellner, W., “External Economies and Diseconomies,” American Economic Review, 1941, 317–26.Google Scholar

²¹ See e.g. Stigler, G., “Production and Distribution in the Short Run,” Journal of Political Economy, 1939.CrossRefGoogle Scholar

²² Kalecki, M., Essays in the Theory of Economic Fluctuations (London, 1939).Google Scholar

²³ Cf. e.g. Robinson, Joan, Imperfect Competition (London, 1933), chap. VIII.Google Scholar

²⁴ Keirstead, B. S., An Essay in the Theory of Profits and Income Distribution (Oxford, 1953).Google Scholar

²⁵ Slutsky, E., “Sulla teoria del Bilancio del consumatore,” Giornale degli economisti, LI, 1915, 11–26.Google Scholar Translated and republished in American Economic Association, Readings in Price Theory, ed. Stigler, G. J. and Boulding, K. E. (Chicago, 1952).Google Scholar

²⁶ Hicks, J. R. and Allen, R. G. D., “A Reconsideration of the Theory of Value,” Economica, 02 and May, 1934 Google Scholar; and Hicks, J. R., Value and Capital (Oxford, 1939).Google Scholar

²⁷ Schultz, Henry, “Interrelations of Demand, Price, and Income,” Journal of Political Economy, 08, 1935, 433.CrossRefGoogle Scholar For an example of earlier articles which made use of the general theory of equilibrium see Schultz, Henry, “Marginal Productivity and the General Pricing Process,” Journal of Political Economy, 10, 1929 CrossRefGoogle Scholar, which Schumpeter calls the clearest exposition of Pareto's theory in English—though not without errors.

²⁸ See e.g. Vehlen, Thorstein, “Why is Economics not an Evolutionary Science?” in The Place of Science in Modern Civilization and Other Essays (New York, 1919), 67, 89, 193, 232.Google Scholar

²⁹ Fisher, Irving, Mathematical Investigations in the Theory of Value and Prices [1892] (New Haven, Conn., 1926), Part IIGoogle Scholar; and “A Statistical Method for Measuring Marginal Utility,” in Economic Essays Contributed in Honor of John Bates Clark (New York, 1927).Google Scholar

³⁰ Frisch, R., “New Methods of Measuring Marginal Utility,” in Verlag von J. C. B. Mohr (Tübingen, 1932).Google Scholar

³¹ Viner, J., “The Utility Concept in Value Theory and its Critics,” Journal of Political Economy, 1925, 369–87, 638–59.CrossRefGoogle Scholar

³² Walras, L., “Geometrical Theory of the Determination of Prices” (translated under the supervision of Professor Fisher), Annals of the American Academy of Political Science (Philadelphia, 1892), III, 45–64.Google Scholar

³³ E.g. Leontief, W., The Structure of the American Economy, 1919–1929 (Cambridge, Mass., 1941).Google Scholar

³⁴ Marshall, Alfred, Principles of Economics (2nd ed., London, 1891 Google Scholar, and subsequent eds.), Mathematical Appendix, Note XII, bis.

³⁵ Marshall, Alfred, The Pure Theory of Foreign Trade; the Pure Theory of Domestic Values (printed for private circulation, 1897; London School of Economics reprint, 1930).Google Scholar

³⁶ Marshall, Alfred, Money, Credit and Commerce (London, 1923), 351–60.Google Scholar The modernity of some of Marshall's insights in this field is exemplified by his contention that silver had been a good currency for India since it had been depreciating while India was lagging in technological development. “Evidence before the Indian Currency Committee (1899),” in Official Papers by Alfred Marshall (London, 1926), 288–9.Google Scholar

³⁷ See Schumpeter, , History of Economic Analysis, 836.Google Scholar

³⁸ See, e.g., Edgeworth, F. Y., Mathematical Psychics (London, 1881).Google Scholar

³⁹ His criticisms in Nature and his presidential address to the British Association were answered, but not in English; see review by Bortkévitch, Ladislas, “Walras L., Eléments d'économie politique pure,” Revue d'économie politique, IV, 1890, 80.Google Scholar See also reply, Edgeworth, F. Y., Revue d'économie politique, V, 1891, 929.Google Scholar

⁴⁰ Schumpeter, , History of Economic Analysis, 831.Google Scholar

⁴¹ He omitted several of his more biting reviews and controversial replies from his Papers Pielating to Political Economy (London, 1925).Google Scholar

⁴² Clapham, J. H., “Empty Economic Boxes,” Economic Journal, 1922, 305–14.CrossRefGoogle Scholar

⁴³ Bowley, A. L., Mathematical Groundwork of Economics (London, 1924).Google Scholar See also Johnson, W. E., “The Pure Theory of Utility Curves,” Economic Journal, 1913, 483–513.CrossRefGoogle Scholar

⁴⁴ Hicks, J. R., Value and Capital (Oxford, 1939).Google Scholar

⁴⁵ This test had already been suggested; see Viner, J., Studies in the Theory of International Trade (New York, 1937), 533–4.Google Scholar

⁴⁶ Recent books in the subject of economic welfare include: Scitovsky, T., Welfare and Competition (Chicago, 1951)Google Scholar; Little, I. M. D., A Critique of Welfare Economics (Oxford, 1950)Google Scholar; Baumol, W. J., Welfare Economics and the Theory of the State (Cambridge, 1952)Google Scholar; Dehem, Roger, L'Efficacité sociale du système économique (Louvain, 1952).Google Scholar For a critical review of certain parts of this development see Timlin, M. F., “Theories of Welfare Economics,” Canadian Journal of Economics and Political Science, XV, no. 4, 11, 1949, 551–9.CrossRefGoogle Scholar

⁴⁷ See e.g. Knight, F. H., “Realism and Relevance in the Theory of Demand,” Journal of Political Economy, 12, 1944 CrossRefGoogle Scholar; Clark, J. M., “Realism and Relevance in the Theory of Demand,” Journal of Political Economy, 08, 1946 CrossRefGoogle Scholar; Bishop, R. L., “Professor Knight and the Theory of Demand,” Journal of Political Economy, 04, 1946, 141–69CrossRefGoogle Scholar; Boulding, K. E., “The Concept of Economic Surplus,” American Economic Review, 12, 1945, 851–69.Google Scholar

⁴⁸ Burk, A. (Bergson), “A Reformulation of Certain Aspects of Economic Welfare,” Quarterly Journal of Economics, 02, 1938 Google Scholar; Samuelson, P. A., Foundations of Economic Analysis (Cambridge, 1947), chap. VIII.Google Scholar

⁴⁹ Arrow, K. J., Social Choice and Individual Values (New York, 1951)Google Scholar; Black, Duncan, “On the Rationale of Group Decision-Making,” Journal of Political Economy, 02, 1948 CrossRefGoogle Scholar, and “The Theory of Elections in Single-Member Constituencies,” Canadian Journal of Economics and Political Science, XV, no. 2, 05, 1949, 158–75Google Scholar; also Weldon, J. C., “On the Problem of Social Welfare Functions,” Canadian Journal of Economics and Political Science, XVIII, no. 4, 11, 1952, 452–63CrossRefGoogle Scholar; and Bergson, A., “On the Concept of Social Welfare,” Quarterly Journal of Economics, 06, 1954.CrossRefGoogle Scholar

⁵⁰ Haley, B. F., “Value and Distribution,” in A Survey of Contemporary Economics, 1.Google Scholar

⁵¹ Robertson, D. H., “A Revolutionist's Handbook,” in Utility and All That, and Other Essays.Google Scholar

⁵² Mackintosh, W. A., “Government Economic Policy: Scope and Principles,” Canadian Journal of Economics and Political Science, XVI, no. 3, 08, 1950, 314–26.CrossRefGoogle Scholar

⁵³ Robertson, D. H., Utility and All That, and Other Essays, 30, 60.Google Scholar

⁵⁴ Robbins, Lionel, The Theory of Economic Policy: English Classical Political Economy (London, 1952).Google Scholar

⁵⁵ That smoke is a nuisance may be obvious but it is also important.

¹³ As in Part I, it is assumed, to begin with, that imports are demanded only for direct consumption.

¹⁴ This condition generalizes readily to any number of countries and is independent of the choice of units. If it is assumed, as in the previous section, that imports are a constant fraction of income, the condition reduces to R₁ = R₂ , since in this case the income elasticities of demand for imports would be unity. This result is used in the later discussion of equilibrium growth.

¹⁵ The significance of this is that consideration of changes in the exchange rate imposes the necessity of choosing between physical and monetary concepts of the propensity to import.

¹⁶ Supply elasticities do not enter into the analysis because they are precluded by the assumptions of the problem—each country's product is homogeneous and its quantity at any moment is fixed. It may be noted that the expression for R_p is independent of the units in which currencies and outputs are measured.

¹⁷ Actually something less, owing to the substitution effect.

¹⁸ The marginal propensity to spend on imports is equal to the marginal propensity to import multiplied by the relative price of imports as compared with home goods (here, pm ₁). The condition η ₁ + η ₂ > pm ₁ + 1 is the condition for exchange stability when country 2's output is constant but country 1's output is allowed to vary in response to changes in its balance of trade (cf. Harberger, “Currency Depreciation, Income, and the Balance of Trade”). Country 1 can therefore suffer a loss of real income in the case in which the exchange market is stable when both countries stabilize output, only if the market would be unstable if country 1 did not stabilize its output.

¹⁹ This assumes that, knowing the exchange market to be unstable, country 1 depreciates its currency (or country 2 appreciates its currency) in order to forestall the favourable balance of trade for country 1 that would otherwise emerge. Presumably, since capital movements have been excluded from consideration, continued depreciation of country 2's exchange rate would in “realistic” cases eventually bring the exchange rate into a range in which country 2's demand for country 1's product would become sufficiently elastic for trade balance to be attained. If, in such cases, country 2 followed normal market criteria and depreciated its currency in order to preserve trade balance, country 1 could not lose by growing too slowly. However, as Professor Samuelson has pointed out (“Disparity in Postwar Exchange Rates,” in Harris, S. E., ed., Foreign Economic Policy for the United Slates, 397–412, especially 409 n. 14)Google Scholar, there is no theoretical reason why, even in the absence of capital movements, depreciation in an unstable market should eventually lead to a stable exchange equilibrium. An example in which no degree of depreciation leads to a stable equilibrium is provided below, equation (57) et seq.

²⁰ Cf. Johnson, H. G., “The Taxonomic Approach to Economie Policy,” Economie Journal, LXI, no. 244, 12, 1951, 812–32, especially 816–17.Google Scholar

²¹ It is changes in the sum of the two elasticities, and not in their individual magnitudes, which are relevant here.

²² Cf. p. 495, n. 19.

²³ If p is greater than 1/q ₁ (less than q ₂), country 1's output (country 2's output) will be contracting, since the imports required for capacity production will cost more than its total output, the difference having to be made up by disinvestment. Consideration of equation (64) shows that this can only occur if the exchange market is unstable.

²⁴ The appearance of this term implies that the import content of domestic production does not necessarily reduce the elasticity of demand for imports. Differentiation of ∊ with respect to q shows that a higher import content ratio would increase the total elasticity of demand for imports, if the elasticity of consumption demand for imports is smaller than the proportion of (net disposable) income spent on consumption imports (e.g., if η ₁ is less than pm ₁).