On the Concept of Foreign Exchange Multiplier-A Correction

Abdul Razzaq Kemal

The Pakistan Development Review, 1976, vol. 15, issue 3, 334-337

Abstract: In an earlier issue of this journal, Diamond [I] has argued that in developing countries increased imports may have an inflationary rather than a deflationary impact on the economy. His reasoning is based on the fact that developing countries are faced with short supplies of imported inputs and not with a deficient demand. An increase in the imports of intermediate goods results in increased production and higher G.N.P. The ratio of the increase in output to the increase in the imports is termed foreign exchange multiplier by Diamond.

Date: 1976
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