you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at

It is well known (Kemp, 1962; Samuelson, 1962; Bhagwati, forthcoming) that, for a country with no monopoly power in trade (or domestic distortions), free trade (in the sense of a policy resulting in the equalization of domestic and foreign prices and hence excluding trade, production and consumption taxes, subsidies, and quantitative restrictions) is the optimal policy. It follows, therefore, that free trade is superior to no trade. It has also been argued recently (Kemp, 1962), that, even in the case where there is monopoly power in trade, so that both no trade and free trade are suboptimal policies, it is possible to demonstrate that free trade is superior to no trade. What of the case where the country has no monopoly power in trade but has a non-economic objective which consists in requiring production to be maintained at a certain level in a specific activity? In the standard, two-commodity case, this type of objective can be treated as requiring production to be necessarily at a particular position on the production-possibility frontier-as has been done by earlier writers, such as Corden (1957) and Johnson (1965). Can we still rank trade as superior to autarky in this case? In the following analysis, we distinguish between two sets of possible trade policies: (1) trade with consumption at international prices and (2) trade with tariffs and (trade) subsidies.

THIRTY years have passed since anyone wrote a book exclusively—or even largely— devoted to an analysis of the supply of money. Phillip Cagan's Determinants and Effects of Changes in the Stock of Money, 1875-1960 (1965)1 would be welcome, therefore, if it did no more than intensify interest in a subject that lay dormant until recently. The book does much more, however. Cagan patiently examines the multitude of factors that influence the principal determinants of the money supply and hence the money supply itself. He then extracts from his data information about the perennial questions: Do changes in money cause the subsequent changes in output and prices? Or, is the stock of money pulled up and down by secular and cyclical changes in prices and output so that movements of money may be regarded as of little or no causal significance