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The Global Correspondence Principle: A Generalization

Jagdish N. Bhagwati; Richard A. Brecher; Tatsuo Hatta

Title:
The Global Correspondence Principle: A Generalization
Author(s):
Bhagwati, Jagdish N.
Brecher, Richard A.
Hatta, Tatsuo
Date:
Type:
Articles
Department:
Economics
Volume:
77
Permanent URL:
Book/Journal Title:
American Economic Review
Abstract:
This paper generalizes the Global Correspondence Principle by extending, in two major ways, Paul Samuelson's 1971 analysis of the exchange rate response to an international purchasing-power transfer. We analyze the price effect of a shift in any parameter, not necessarily a transfer. We then explore the resulting adjustments in any nonprice variable such as welfare. As our analysis shows, the direction of these adjustments depends neither on whether they are small or large nor on whether equilibrium is locally stable or unstable.
Subject(s):
Economic theory
Item views:
99
Metadata:
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