Gustav Cassel's purchasing power parity doctrine in the context of his views on international economic policy coordination

Abstract

Gustav Cassel (1866–1945) has formulated a number of original ideas concerning international economics and finance. These include what possibly was one of the earliest theoretical visions of the goals and scope of international economic policy coordination. However, these ideas largely remained unnoticed or were forgotten after his death. To a large extent, it is due to the fact that Cassel's comprehensive theoretical framework was subject to later fragmentation, while one of the key elements of his argumentation – the purchasing power parity (PPP) doctrine – was taken out of the context and subsequently misinterpreted. The paper aims to reconstruct Cassel's vision of the goals and tools of the international economic policy coordination and to present PPP doctrine in the original theoretical framework.