Two approaches are used to explore the implications for environmental policy of a possible endogenous bias of technical progress for environmental degradation. Using a frontier approach of innovation-possibility and the alternative approach that is critical of innovation-possibility, the author finds that both models indicate a bias for pollution when there is no charge for environmental amenities. The result is that pollution increases faster than production. He concludes that if pollution is to be stabilized in a growing economy, the price must be positive and flexible so that it can rise in response to labor productivity and wage increases. 17 references.

The object of this paper is, unfortunately, destructive. It is to argue that almost all of the models in the Keynesian balance-ofpayments literature suffer from internal contradictions and deficiencies which make them unsuitable for balance-of-payments theory. Doubling the Keynesian closedeconomy equations does not provide an appropriate description of the international economy. More careful attention needs to be given to portraying the money markets than is usually the case, and assets must be included in the various demand functions in any acceptable analysis. Contributions employing the monetary approach to balance-of-payments theory are largely free of the criticisms made in this paper; see, for example, those by Frank Hahn, Murray C. Kemp (1962, 1964, 1970), Takashi Negishi, Rudiger Dornbusch (1973a,b), Pentti J. K. Kouri and Michael G. Porter, Michael Mussa, Jacob A. Frenkel and Carlos A. Rodriguez, Richard K. Anderson and Akira Takayama, and the author(1970, 1972, 1975, 1976, 1977). The fact that theorists using a different approach have written papers which do not fall into the difficulties discussed below does not, however, necessarily imply either that the profession at large is, or the particular theorists involved were, aware of these problems in the Keynesian literature. We have, for instance, the following quotation from a well-known article in the monetarist literature by Dornbusch.