publication . Article . 2014

Economic growth: trade, public finance, and the paradox of thrift

John Smithin;
Restricted
  • Published: 01 Jan 2014 Journal: Review of Keynesian Economics, volume 2, pages 456-463 (issn: 2049-5323, eissn: 2049-5331, Copyright policy)
  • Publisher: Edward Elgar Publishing
Abstract
The classical argument for free trade stressed the possibilities of economic growth by exploiting the gains from trade. A trade surplus per se was not the main objective; presumably the argument was that trade would be balanced at the new higher growth rate. Moreover, the arguments for free trade were made against the background of an assumed hard peg (the gold standard) which would enforce balance of payments equilibrium. This means that contemporary free trade agreements (FTAs), with floating exchange rates, cannot be defended on the traditional grounds. With a floating exchange the appropriate policy advice for each individual jurisdiction is monetary mercant...
Subjects
free text keywords: balance of payments, classical economics, exchange rates, monetary mercantilism, fiscal policy, free trade, FTAs, growth, hard peg, investment, Keynes, savings, sectoral balances, Economic integration, Economics, Commercial policy, Balance of payments, Free trade, Trade barrier, International economics, International free trade agreement, Balance of trade, Gains from trade, jel:E12, jel:E62, jel:F15, jel:F41, jel:F43, jel:F52
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publication . Article . 2014

Economic growth: trade, public finance, and the paradox of thrift

John Smithin;