The Economic Effects of Rising and Falling Prices

I IX) not propose in this paper to enter into a technicat discussion of the methods by which a rise or fall of prices.maybe measured, or to attempt to draw conclusions from statistics.Nor am I concerned with the causes of price changes.My object is rather to suggest a few generalisations, some of which may be made'with confidence, others with considerable reserve, as to the part played by price changes in the economic life of a community.At the outset it is convenient to distinguish movements that are more or less general and movements that are the result of causes which only affect a part of the econcMnic field.If we briefly consider the latter first it will clear the ground for the discussion of more general changes and at the same time g^ard against the very real danger of attempting to explain a partial movement of prices as though it were the result of a general cause. PARTIAL PRICE MOVEMENTS.Partial price movements are the result of changes in the supply or demand of particular articles or groups of articles; that is to say, they are produced either by a change in the relative desirability of different classes or goods or services such as may be caused by changes of fashion, the development of new needs or a redistribution of wealth; or else they are produced by influences which affect the available supply or the cost of production of particular goods or services. Illustration in tke case of individual articles.Movements of this kind are continiudly occurring, so that even in times of acute depression or of boom it is always possible to find some articles whose prices are moving,in a contrary direction to the general trend.In the twenty-two years, for example, of falling prices after 1874, coffee moved in an independent manner and was actually higher at the end than at the beginning of the period, for the world's coffee production failed to meet the growing demand.Since 1896, on the other hand, most mw materials have risen

Demographic economics · Economics · Falling (accident) · Sociology · Economic Theory and Policy · Psychology