Japan's Foreign Exchange and Her Balance of International Payments: With Special Reference to Recent Theories of Foreign Exchange

Japan's Foreign Exchange and Her Balance of International Payments: With Special Reference to Recent Theories of Foreign Exchange

Japan's Foreign Exchange and Her Balance of International Payments: With Special Reference to Recent Theories of Foreign Exchange

Japan's Foreign Exchange and Her Balance of International Payments: With Special Reference to Recent Theories of Foreign Exchange

Excerpt

During and after the World War, exchange was one of the popular topics of discussion which demanded clear thinking. Practically all nations except the United States suffered from dislocated exchanges. Yet the theories as to the causes and remedies of these abnormal exchanges differed a great deal among the writers of different countries. Cassel, Keynes and most of the English economists have supported some form of the purchasing-power-parity theory, while other European economists adhered to a "speculation" theory, a "budgetary" theory, or a "reparation" theory. American economists were also divided in their opinions. But not all were satisfied with the line of thought developed by Viscount Goschen, Ricardo and J. S. Mill, for the classical theory of foreign exchange did not throw sufficient light upon the explanation of recent exchange movements. To say that exchanges are determined at the juncture of supply and demand is easy. But the matter is not quite so simple. We want to go a step farther, and ascertain what are the real conditions that determine supply and demand.

Various surveys of actual foreign exchange history have been recently made in different countries, but very few agree as to results. Taking this opportunity, the writer presents in the following study the Japanese case. Not belonging to any school or camp in the present exchange controversies, the author has tried to present the case as fairly as possible. Unfortunately, however, he has reached the conclusion that none of the recent exchange theories is adequate to explain the Japanese experiences.

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