ABSTRACT

DEVELOPM ENTS SINCE 1918 : TH EORIES OF THE

EXCHANGES U N D ER D EPR EC IA TE D CURRENCIES

1 . P r e l i m i n a r y R e m a r k s

The development of the theory of international price relationships since the Great War has been associated mainly with two important controversies : that in regard to the exchanges of depreciated currencies and that in regard to the transfer problem. The controversy concerning the rates of exchange of depreciated currencies has thrown light on the question of the adjustment of a violent disturbance due to a monetary cause, while the controversy concerning the transfer problem has clarified thought on the question of the correction of a disturbance due to an unfavourable balance of payments. We shall describe the former controversy in the present chapter and devote the following chapter to the latter controversy.