ABSTRACT
Expenditure switching policies are those that change the direction of home demand between domestic output and imports, and of foreign demand between foreign output and our exports. Since they have a direct impact on the balance of payments, they would seem much simpler and less painful to use for payments adjustment than expenditure adjusting policies, whose effects on external payments are indirect and exerted only through their much stronger effects on the domestic economy. This, indeed, is the customary argument for trade control. All forms of trade control, the restriction of imports, of capital outflows, and the special encouragement of exports, go directly to the root of a payments imbalance and so seem less painful than restrictive fiscal and monetary policy; but they have their own shortcomings and undesirable side-effects. As administrative controls, they fall outside the scope of this book.
