Palley's macroeconomic trade theory

["Gernot Koehler" <gktbg1@xxxxxxxxxx>]

To: pkt
Cc: Palley

Re:  Thomas I. Palley, "International Trade, Macroeconomics, and Exchange
Rates: Re-examining the Foundations of Trade Policy"

(Draft Discussion Paper,
presented to pkt in May 2003, comments welcomed)

COMMENT:
An excellent paper, presenting  a Keynesian macro-economic
view of international trade theory, including statements like:

(a) [sc. available] "trade theory ignores macroeconomic concerns associated
with aggregate demand conditions and finance."

(b) "the presumption can no longer be that trade increases welfare."

(c) "comparative advantage is a special theory of trade that holds only at
full employment."

(d) "critical relevance of exchange rates for the theory of international
trade. Yet, remarkably, despite being critical to the determination of trade
patterns, exchange rates are invisible in economists' discussions of
international trade and its welfare implications."

(e) discusses various hysteresis effects of misaligned exchange rates (e.g.,
regarding job losses)

(f) discusses policy implications

The paper deserves wider discussion.

Gernot Köhler, Ph.D.

Please keep me connected to this discussion. As I will be back in Canada in
September, please use my portable email address

     gko15@xxxxxxxxxxx

-----------
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G. Kohler and A. Tausch, Global Keynesianism: Unequal Exchange and Global
Exploitation. Nova Science, USA, 2002.

G. Köhler and E.J. Chaves (eds), Globalization: Critical Perspectives. Nova
Science, USA, 2003