Transfer problem

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The term transfer problem (transfer from Latin transfer, transfer ) is understood to mean payment , foreign exchange and default risks that arise in the transfer of goods , services , capital , foreign exchange in the form of domestic export to foreign countries or payments from a country to a other occur. The transfer problem was recognized in economic theory after the economic consequences of the First World War and shaped the scientific discussions between John Maynard Keynes and Bertil Ohlin in the 1920s .

General

The transfer problem was recognized with the reparations payments and the economic collapse of Germany after the First World War. The transfer theory developed with 3 mechanisms :

  • The classic mechanisms
  • The Keynesian Mechanisms
  • The Neoclassical Mechanisms

The transfer theory examines the effects of international capital transfer and reparation payments, international bonds and international financial donations on key economic factors in the countries involved.

Furthermore, the transfer problem is understood as the effects of international transfers on the terms of trade . Under the terms of trade (trading conditions) is the ratio between the value of exports and the value of imports.

  • If the export price is less than the import price, then the terms of trade worsen.
  • When the export price is greater than the import price, the terms of trade improve.

Monetary transfer

The monetary transfer is called the capital transfer in the form of bonds and reparation payments to foreign countries.

Example:

  • Country A (abroad) is to provide the government of country B (domestic) with a euro bond. If country A does not use this bond directly to buy goods from country B, the following result occurs: The demand for foreign exchange in country A increases due to these capital imports, which means that the monetary transfer is successful.
  • A managing director of a company sells company shares worth X to a foreigner and he uses the financial resources to build up his company. The result is :: Domestic: The capital import leads to an increase in domestic income and an increase in demand for investment activity.
Abroad income rises and, in addition, the interest rate and the increase in capital movements lead to an excess of foreign exchange supply.

Real transfer

The real transfer is understood to be the export surplus of goods and services or the change in exports and imports. Quite simply: The manager uses the transferred money to buy goods. Then we have what is known as a real transfer.

  • The transfer problem is investigated in the classical mechanism and is the relationship between import, export and total expenditure changes. If the total change in expenditure falls, then expenditure on domestic goods or on foreign goods can decrease. The result is the decline in domestic imports.
Example: If domestic A makes a transfer payment X, then
Domestic A : Its government spending and domestic import decrease, and domestic export increases for foreign investment.
Abroad B : its government spending and its foreign imports are rising and foreign exports are falling, for example for consumer and capital goods.
  • The transfer problem is examined with the Keynes mechanism and is the influence on the capital export of both countries. Especially we have the relationship between income and the import, export price.
Example: Domestic A makes a transfer payment X.

Then:

In domestic A: his income falls by X and his imports fall by aX
Abroad B: his income increases by X and his imports increase by bX
  • The transfer problem is examined in the neoclassical mechanism and is the international transfer of resources. Example: Country A transfers the machines or machine systems to Country B, or the companies and public institutions of Country B borrow from Country A for the purchase of capital goods.
  • In the context of the transfer problem, the direct effects of a transfer on the demand side are analyzed as well as the question of whether the monetary transfer results in a real transfer .
If X (transfer payment) = export - import, then the financial transfer results in a real transfer in the same amount given the terms of trade.
If X (transfer payment)> export - import, then the financial transfer does not result in a real transfer.

literature

  • Gustav Fischer: Concise Dictionary of Economics - Volume 8, Stuttgart 1988
  • Klaus Rose and Karlhans Sauernheimer: Theory of Foreign Trade , Munich Vahlen 2006, ISBN 3-8006-3287-X
  • Manfred Borchert: Außenwirtschaftslehre , 7th edition Wiesbaden Gabler 2001, ISBN 3-409-63907-1
  • Horst Siebert and Oliver Lorz: Foreign Trade , Stuttgart; Lucius & Lucius 2006, ISBN 3-8252-8081-0