The Foreign-Trade Multiplier, The Propensity to Import and Balance-of-Payments Equilibrium.

The article seeks to clarify the shortcomings of a previous article written by the author which discussed foreign trade, import and balance of payments equilibrium. According to the author, the error appeared in a discussion of the equilibrating mechanism in the balance of payments of a country with a high foreign-trade multiplier and a high propensity to import as compared with a country with a low foreign-trade multiplier and a low propensity to import. The author claims that the deviation in the article was due to the fact that he was talking about the behavior of real economies and not about the economic models of Machlup.