The Global Correspondence Principle: A Generalization

Authors

Jagdish N. Bhagwati, Columbia Law SchoolFollow
Richard A. Brecher, Carleton University
Tatsuo Hatta, The Institute of Social and Economic Research

Publication Date

1987

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 we/fare. 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.

Disciplines

Economics | International Economics

Comments

Copyright © 1987 by the American Economic Association.

Recommended Citation

Jagdish N. Bhagwati, Richard A. Brecher & Tatsuo Hatta, The Global Correspondence Principle: A Generalization, 77 Am. Econ. Rev. 124 (1987).
Available at: https://scholarship.law.columbia.edu/faculty_scholarship/3782