Transfer problem

The transfer problem is a subject of debate between Keynes and Bertil Ohlin in the 1920s, regarding the issue of the ability of German reparation payment after World War I. In general terms, it refers to the effect of transfer of income on the donor's terms of trade. The reversal of capital flows force countries to go from a current account deficit to a current account surplus.

References

Barry W. Ickes. (2009). The Transfer Problem
Paul R. Krugman, Maurice Obstfeld. (2006) International Economics: Theory and Policy. (7th edition). Pearson. ISBN 0-321-27884-4.

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