Origins of Terms in International Economics

Google also finds a mention of tiger economies in a paper on Southeast Asia in the 1985 Philippine Journal of Third World Studies, but I haven't been able to access that journal to see if they are named there. I suspect not.

So the earliest explicit use of Asian Tigers to mean these four countries seems to be in 1987, and in that year it appeared twice. Rabushka (1987) had the following: "The four Asian Tigers -- Hong Kong, Singapore, Taiwan, and Korea -- are renown [sic] as the hyper-growth economies of the Pacific Rim." and Griffith (1987) had

And recently, neo-classical economic thinkers are citing the economic success of the Asian Tigers - Hong Kong, Taiwan, Singapore and South Korea - as empirical evidence that an export-oriented strategy of development tends to be positively correlated with better growth.

The current method seems to have been used first in the 1985 edition of the Atlas, where it said "...the procedures for estimating gnp in U.S. dollars differ from those used in previous years." Previous editions had used average prices and exchange rates from a three-year base period, whereas the new procedure was to use "the simple average of the exchange rates for the current year and for the two preceding years; the latter two exchange rates are adjusted for differences between domestic and U.S. inflation." The most important difference between the new and old methods was that the old one used a different conversion for a given year in successive editions of the Atlas, making comparisons difficult. I am unable, from reading details of the prior procedure, to tell whether the new one also causes other differences. In any case, it seems that the subsequent use by others of the Atlas method has been to use the method introduced in World Bank (1985).

In an effort to determine whether the Atlas method had a prior history, I have used Google Scholar to search for Atlas method over various years. The term itself was used with other meanings prior to its use by the World Bank, as well as subsequently: a method of measuring the maturity of skeletons; a method in meteorology for detecting weather events; a tool for measuring the "HLB value of a reagent," whatever that is, by Atlas Chemical Industries; and an exercise program by body builder Charles Atlas.

The earliest mentions of the World Bank's Atlas method were in 1980, where I found two. One of these (by M.Y. Smith, "Romania: forecasting and development," in Futures) mentioned "following the World Bank Atlas method of adjusting official Romanian national accounts data." The second (by Davies, Grawe, and Kavalsky, "Poverty and the Development of Human Resources: Regional Perspectives," World Bank) had a table of GNP per capita data labeled "IBRD Atlas method, US dollars."

From these it appears that the term Atlas method predated the version of World Bank (1985) and referred to the method used in prior editions, which seems to have been slightly different.

Fetter (1935) dated the term to 1623, apparently disagreeing with Price that its use in 1615 was comparable. His main concerns were with the common attribution that a positive balance of trade is "favorable" and with whether the term includes only trade in goods or instead extends beyond that to include other payments such as we today would include in the balance on current account or even balance of payments. It appears that early writings used the term variously in each of these senses.

[I was alerted to the articles by Price and Fetter by Obstfeld (2012).]

The origin of the term was nicely discussed by Weisman (2009), who credited it to Joan Robinson (1937), whom he thanked "for such a vivid phrase." He also pointed out that she likely got the phrase from a 19th century card game, Beggar My Neighbor, of which he said the "first literary appearance ... was in the novel Great Expectations, published in 1861" by Charles Dickens. That is especially plausible given that Robinson herself never used the term beggar thy neighbor, but only >beggar my neighbor. It appears in the title of her essay, "Beggar-my-Neighbour Remedies for Unemployment," and in several passages as the "game of beggar-my-neighbour," such as (p. 156):

In times of general unemployment a game of beggar-my-neighbour is played between the nations, each one endeavouring to throw a larger share of the burden upon the others. As soon as one succeeds in increasing its trade balance at the expense of the rest, others retaliate, and the total volume of international trade sinks continuously, relatively to the total volume of world activity.

The first use of the term that I can find in a context of international trade showed up in an un-authored piece, perhaps an editorial, in the Honolulu, Hawaii, Daily Herald, June 3, 1887. An article titled "The Sugar Industry" discussed how multiple countries were exporting sugar at below their domestic prices and less than the cost of production (what today we would call dumping), "the idea apparently being to ruin the British refiner at the expense of the foreign taxpayer." Before that it says, "It is a singular game to play something like that known as beggar my neighbor." While the context was trade, the objective was clearly not what we would mean by it today.

The first clear use of the term with today's trade meaning preceded Robinson (1937) and was by Reynolds (1934, p. 180):

The return of prosperity to Germany is dependent on foreign trade. But, the countries of the world are still engaged in the pastime of "beggar my neighbor," played with tariff walls, exchange restrictions and the rest of it, and Germany is playing it at least as hard as anyone else.

For many years the Republican apologists have been talking mercantilism of the crudest sort, measuring our prosperity in terms of an excess of exports and welcoming the draining of the rest of the world of gold. This "Beggar my-neighbor" policy has been revived by Mr. Peek, who proposes in effect to come to direct barter on a simple two-party basis.

It is therefore not certain that Robinson should have the credit that Weisman gives her for introducing the term beggar my neighbor (not beggar thy neighbor) to the literature on international trade. But to the extent that the term caught on, it does seem likely that Robinson's greater visibility compared to Reynolds and Elliott would have been the cause.

And catch on it did. In the decade 1940-49, Google Scholar finds at least 18 articles including beggar my neighbor in the context of international trade, including six in the American Economic Review. The peak was five articles in 1947.

But that is not the term that is most widely used today. Instead beggar thy neighbor has largely replaced beggar my neighbor, as we can see from Google's NGram of the two terms:

The surge in appearances of beggar my neighbor in the 1800s presumably reflects the popularity of the card game, which then declined. One sees the rise in its use in the 1930s and 1940s, perhaps showing its rise in the context of international trade, which took off even more in the 1950s and 1960s. But beggar thy neighbor appeared for the first time in the 1940s, then took off in the late 1960s, and it has dominated beggar my neighbor ever since.

Searching for appearances of beggar thy neighbor in Google Scholar, the first I find is Berge (1946, p. 687) who wrote, in discussing the Great Depression:

New tariffs appeared, more cartels were formed, systems of national barter through bilateral pacts, selective attack by dumping, and all the other stratagems common to beggar thy neighbor policies were brought into play.

It was not until the early 1950s that beggar thy neighbor began to appear in the economics literature, first by Hildebrand and Mace (1950) in Review of Economics and Statistics and then by Kindleberger and Despres (1952) in American Economic Review. The latter included (p. 332)

The two guiding principles were that no country should be prevented by balance-of-payments difficulties from pursuing domestic policies of full employment, and that no country should be permitted to adopt "beggar-thy-neighbor" measures for exporting unemployment.

But why did he or someone else feel the need to change beggar my neighbor into beggar thy neighbor? I can only offer my own speculation, which others may find either obvious or silly:

The card game that seems to have started all of this was all about deliberately eliminating the other players in order to win the game. So beggaring one's neighbor was not only the object, but something to be applauded. Thus it was desirable for one to focus approvingly on the negative effects one could have on one's own, i,e. "my," neighbor. But as the game came to be used as a metaphor for destructive competition, the focus shifted to the negative effects that others would have on ourselves, and therefore the perspective moved to that of the neighbors. Beggar thy neighbor therefore speaks disapprovingly from the neighbor's point of view and stresses that negative connotation.

As the NGram chart above shows, beggar my neighbor has not entirely disappeared. And while economists generally disapprove of uses of trade and exchange rate policies to benefit oneself at the expense of others, there are undoubtedly some who still -- from a nationalist perspective and discounting the likelihood of retaliation -- favor such actions. It would be interesting to see whether current uses of beggar my neighbor tend to correlate with that point of view. Perhaps those who use beggar my neighbor in the context of international trade continue to see trade as a zero sum game, which the original Beggar My Neighbor game certainly was, while those who recognize that international trade is a positive sum game have shifted to beggar thy neighbor.

Together these two parts were named One Belt, One Road. The purpose was not just to facilitate greater trade between China and other countries, but also to increase China's influence in those countries and even to foster greater use of the Chinese currency.

The change to calling it the Belt and Road Initiative in English is explained in this passage from The Economist, June 11, 2022:

With the BRI, naming had proved a problem. To Western ears, "One Belt, One Road", as it was originally called, sounded inflexible: a China-centric view of how the world's infrastructure should be built. Apparently to help allay such concerns, the English name was changed in 2015. In Chinese, it remained the same.

Then suddenly in 1970, Google Scholar finds 100 occurrences of the term in that year alone, though still never in an international economic context. This explosion of uses of the term followed wide reporting of a memo by Daniel Patrick Moynihan, counselor to President Nixon. Moynihan wrote:

The time may have come when the issue of race could benefit from a period of 'benign neglect.' The subject has been too much talked about. The forum has been too much taken over by hysterics, paranoids, and boodlers on all sides. We may need a period in which Negro progress continues and racial rhetoric fades. Source

In 1971 there were at least nine uses of the term benign neglect with the meaning used here: that the US either was doing or should have been doing nothing about its balance of payments deficit, leaving policy responses to other countries. Many of the authors who used the term put it in quotation marks, but none of them said whom they were quoting, if anybody. Many were critical of the policy itself, referring to "experts" or "economists" who advocated the policy, but mostly without naming them.

The policy of benign neglect, but without that name, was attributed by Halm (1968) to Despres, Kindleberger, and Salant (1966). According to Halm, p. 1:

In an article "The Dollar and World Liquidity. A Minority View," published in The Economist of February 5, 1966, Emile Despres, Charles P. Kindleberger, and Walter S. Salant challenge what they call "the consensus": the belief that the payments deficit of the United States must be eliminated to recreate confidence in the international payments system, and that some way must be found of making the supply of world liquidity independent from a further growth of foreign-held dollar balances. ... [Instead, the] balance-of-payments deficit of the United States is the perfectly normal result of America's role as international financial intermediary.

An attempt to halt the capital outflow by raising interest rates in the United States either would have little effect over any prolonged period or else would cripple European growth. The effort is now being made to "correct the deficit" by restricting capital movements. Success in this effort is dubious ... ."

After discussing this "minority view" extensively, Halm concluded that "The solution suggested by the minority view suffers from several weaknesses, which make it unlikely that it can supplant or even decisively influence the majority view," and he went on to list 12 "points of contention."

Later writers more frequently credited the policy, though again not the name, to Krause (1970) who advocated "A Passive Balance-of-Payments Strategy for the United States" in an article with that title in Brookings Papers on Economic Activity. Krause too, however, made no use at all of the words "benign" or "neglect." Instead, it seems to have been Haberler and Willett (1971), also arguing for a "passive balance of payments policy," who then went on describe it as a "policy of benign neglect":

A passive attitude towards the balance of payments can be described as a "policy of benign neglect." It should be observed, however, that neglect of the balance of payments does not imply neglect of either the interests of the U.S. or of those of our trading partners.

Rather surprisingly, neither Krause nor Haberler and Willet cited either Depres et al. (1966) or Halm (1968), even though the policy they advocated seems the same as that of the former. The Haberler and Willett paper was dated January 1, 1971, only a few months after Krause, and neither of these papers mentioned the other. So it appears that they may have arrived independently at the same policy recommendation both as each other and as Depres et al.

As for calling it the policy of benign neglect, that seems to have originated with Haberler and Willet. Halm in his title had mentioned "deficits benign and malignant," but it does not appear that Haberler and Willet took the word "benign" from him, since they do not cite him. Instead, I conclude that Haberler and Willet were the first to apply the already familiar term benign neglect to US balance of payments policy.

The term originated in a famous case in 1880 in which the Irish Land League, which fought for the rights of landless peasants, used a policy of non-interaction to pressure Charles Boycott, the despotic agent of an absentee landlord, into making concessions to rural tenants. Soon his name was widely used as a noun and verb; it entered the French language one year later and by the end of the decade was used in Spanish, Italian, Portuguese, Swedish, German, Dutch, and even several Asian languages.

Since then, carousel has continued to be used in this context, including as a verb: "to carousel the tariffs." For for more on this history of the carousel approach, see Griffin (2019).

One of the co-authors, Minhas1962, tried to rename it the "homohypallagic" function, deriving from Greek homo=same and hypallage=substitution. He credited the idea for this name to Emmanuel G. Mesthene of the Rand Corporation. The name did not catch on.

Mukerji (1963) also tried to rename it the "SMAC function," using the initials of the four authors of Arrow et al. (1961) -- Solow, Minhas, Arrow, and Chenery -- but that too failed to catch on.

The CES function did not play a major role in international trade theory during the first decade or two after its introduction, perhaps because trade theorists had a proud tradition of deriving results without specifying functional forms. It came into its own, however, in the Dixit-Stiglitz function used by Krugman (1980) as central to incorporating monopolistic competition into the New Trade Theory. The innovation there was to make the number of products (interpreted as varieties) variable.

If the impediments consist of artificial tariffs whose revenues represent mere transfers of income, substitution effects are more heavily involved, the only income effects being the transfers between and within countries and the "deadweight loss" resulting from interferences with perfect competition.

The latter appeared in Samuelson (1960) in which he honored Harold Hotelling. Perhaps coincidentally, Hotelling (1938) is one of two sources that I came across that used "dead loss" to mean the efficiency loss due to a tax. This suggests to me that Samuelson may have introduced deadweight loss as an improvement over "dead loss," since the latter is used with other meanings in other contexts. Because of that, I've found it difficult to search for others who may have used "dead loss" with this particular economic meaning (more commonly it simply means an activity that is not successful). But I did happen across Bickerdike (1906) who used it precisely for the triangle of unrequited consumer loss due to an import tariff:

It can be shown geometrically that the "loss" Aka comprises all the dead loss involved in the reduction of imports, including the waste of energy.

Whatever may have motivated Samuelson, his use of the term certainly caught on. Whereas my search for the term prior to 1950 found nothing, and in 1951-1960 found only the several articles by Samuelson, in 1961-1970 it appeared 26 times, almost all by authors other than Samuelson and with his meaning.

There is less consensus on whether to render the term as 1) deadweight loss, 2) dead-weight loss, or 3) dead weight loss. Samuelson himself, in Samuelson (1960), used both the first and the second on the same page (p. 24). A Google-Scholar search over 1970-2016 finds more than twice as many of the first (17,600) as of the second and third combined (7,580).

Although Hoover referred to the world has experiencing "a great depression," he did not give it the name The Great Depression. That seems to have been coined by Robbins (1934).

U={Σ_iⁿx_i^ρ}^1/ρ       0<ρ<1

U=n^(1-ρ)/ρ(nx)

Dixit and Stiglitz (p. 298) started with a somewhat general form for utility, u=U(x₀,V(x₁,x₂,x₃,...)), where the range of products was left unspecified but greater than the number of products actually consumed, n. They then considered several special cases, the one usually adopted by others being a CES form for the function V: u=U(x₀,{Σ_iⁿx_i^ρ}^1/ρ). What was crucial and distinctive about either form was that the number of products (often called varieties) consumed, n, was variable.

Neary (2004) noted that later users of Dixit-Stiglitz utility combined three assumptions that Dixit and Stiglitz themselves mentioned but never used in combination: symmetry of V in x_i, CES form for V, and Cobb-Douglas form for U. He therefore suggested that the following should be called "Dixit-Stiglitz lite":

u = x₀^(1-μ)V^μ,       V={Σ_iⁿx_i^ρ}^1/ρ

In fact later users have often omitted the numeraire good, x₀, or replaced it with other goods. And the symmetric CES function with variable n has, by itself, come to be what is most commonly regarded as the Dixit-Stiglitz utility function, or sometimes the Dixit-Stiglitz subutility function. In that case the Dixit-Stiglitz utility function appears identical to the CES function, the only difference being the interpretation of n as variable.

The function has also been used frequently for production, with the x_i as intermediate inputs, following Ethier (1982). The number of varieties was again variable and contributed to the value of the function, which in this case was output. However, Ethier made the role of n in productivity explicit with a second parameter, and his production function was:

M = n^α{Σ_iⁿ(x_i^ρ/n)}^1/ρ,       0<ρ<1, α>1

The term came into frequent use in 1903 in several books that were published in that year, such as Ashley (1903), and especially in the speeches of Joseph Chamberlain. In a speech on tariff reform in Liverpool on October 27, 1903, he defined dumping and stressed its harm to free-trade Britain:

What is dumping? Dumping is the placing of the surplus of a home manufacture in a foreign country without reference to its original and normal cost. Dumping takes place when the country which adopts it has a production which is larger than its own demand. Not being able to dispose of its surplus at home, it dumps it somewhere else.

Although the definition of dumping is today codified in the WTO and in national anti-dumping statutes, its definition has been subject to some dispute. Viner (1923) examined several alternative definitions and concluded in favor of "price discrimination between national markets" (p. 3). This deliberately included selling for different prices in different foreign markets and selling at home for a lower price than abroad. He called the latter practice "reverse dumping," and then had to identify the more common opposite practice as "export dumping." Finger (1993), who has argued that any industry can secure anti-dumping duties if there is political will, prefered to define dumping as "whatever you can get the government to act against under the antidumping law" (p. vii).

The first anti-dumping law was enacted in Canada in 1904, as part of amendments to the Customs Tariff Act of 1897, according to Ciuriak (2005). As reported there, the legislation made no use of the words dumping or anti-dumping. and merely provided that imports should be subject to a "special duty of customs equal to the difference between such fair market value and such selling price."

The first use that I've found of anti-dumping was Shortt (1906), writing about the Canadian policy. That the term caught on may not be surprising, but note that the other WTO-permitted unfair trade policy, directed at subsidized exports, is called a countervailing duty, not an anti-subsidy duty.

Google Scholar finds only two occurrences of the economic weapon prior to 1912, and these were both in the context of industrial-labor relations, where the term refered to economic actions such as strikes that workers might use against their employers. The first occurrence I find of the term meaning an economic substitute for military action against other countries was Adams (1915, p. 219):

The economic boycott is a powerful weapon in the modern commercial and industrial world, and it should be a duty of those who are parties to international agreements to use this weapon against the transgressor and to inflict economic ostracism until expiation has been made. But the economic weapon, powerful as it is, and sufficient as it may be in many cases, is not always an adequate sanction. More direct methods are then necessary and recourse must be had to armed intervention by force.

Bowley's name was added to the name of the diagram as a result of Bowley (1924), who drew indifference curves for two individuals, one rotated clockwise 90 degrees and the other counterclockwise, thus forming the outline of a box, within which he showed Edgeworth's contract curve. That is probably why his name came to be associated with Edgeworth's. However, Bowley did not claim originality, and while he cited Edgeworth for the contract curve, he neither named nor attributed the box diagram. Indeed, in his own diagram showing exchange, his focus was on the internal portion and he did not extend the axes of his two indifference maps far enough to touch or cross, and therefore did not actually produce a box. Had he done so, his box would have been a mirror image of the one we normally draw today.

It was Pareto (1906), writing in Italian that was soon translated into French, who had actually been the first to draw and use the box diagram. It is unclear whether his contribution was known to Bowley and to others writing in English until later. His diagram, displaying indifference curves for two consumers, one drawn conventionally and one rotated 180 degrees, formed the box very much as we know it today, for exchange between consumers. With each consumer endowed with only one of the two goods, he showed a trade equilibrium as a common tangent to two indifference curves that were also tangent to a price line from the consumers' endowment point.

I have searched in Google Scholar for "Edgeworth box," "Edgeworth-Bowley box," "box diagram," and the joint appearance of "Edgeworth" and "box." The last of these gets many hits, of course, but none of them were about the Edgeworth box, until Stolper and Samuelson (1941). Their Figure 2, p. 67, had labor and capital on the axes and isoquants for two industries inside. Of this they said:

This is done in Fig. 2 which consists of a modified box diagram long utilised by Edgeworth and Bowley in the study of consumers' behaviour.

Based on all of this, it appears that the box applied to consumption, as well as the Edgeworth production box, have both often been called just the Edgeworth Box, even though Edgeworth never drew either. Calling it the Edgeworth-Bowley box is only slightly less erroneous, since Bowley's version of the box was incomplete and perhaps accidental.

Pareto was more deserving of having his name on the consumption version of the box diagram than either Edgeworth or Bowley. Stolper and Samuelson, if they needed further recognition, should share credit for the application to production that has played such a large role in international trade theory. And it seems likely that they, too, were the ones who led us to call it the Edgeworth or Edgeworth-Bowley box ever since.

E_ij = α₀Y_i^α₁Y_j^α₂D_ij^α₃

Pöyhönen was member of the same Finnish research team as Pulliainen (1963) whose formulation was more like Tinbergen's. While he also did not call this a gravity model, he did mention the parallel: "The results of our empirical study show that the structure of international trade is capable of description in terms of gravitational theory." (p. 88).

This analogy to gravity was actually resisted by another early user of the model, Linnemann (1966), on the grounds that force of actual gravity falls with the square of the distance between objects. He followed the above authors in setting out an equation much like the above, with Y's replaced by "potential supply" and "potential demand" which he went on to explain in terms of both GDP and population. But in his footnote 43 (pp. 34-35) he remarked, "Some authors emphasize the analogy with the gravitation law in physics, and try to establish that [α₃=−2]. We fail to see any justification for this." And in the rest of his book the only mention of gravity regards the "centres of gravity" of the countries considered, used for defining distance between them.

The first to call this a gravity model seems to have been Waelbroeck (1965), which included (p. 499) "Hypothesis 2: The gravity model: distance, export push, and import pull" and has the equations from the other three authors. Waelbroeck notes that "There is, as has been pointed out, an odd similarity between formulae (6) and (7) and the law of gravity, with Y_i and Y_j playing the role of masses, and this justifies christening the model as the gravity, or G, model." He did not say where it was "pointed out," but it seems likely that he was referring to Pulliainen (1963).

Predating all of this explicit application to bilateral trade between countries, however, the term gravity model was used in other social science contexts, and models of this form were used, under other names, in other applications. Bramhall and Isard (1960), in a chapter of a volume on regional science, discussed "gravity, potential, and spacial interaction models -- which for short we shall term gravity models." Similar to other earlier applications that do not seem to have used that name, they formulated the number of trips between areas with different populations, using populations instead of GDPs.

Another later source, Glejser and Dramais (1969), cited gravity models as having been used for a long time in literatures on migration, tourism, and telephone calls as well as trade. In a series of papers starting with Zipf (1946), Zipf applied what he called "The P₁P₂/D Hypothesis" to inter-city movements of freight, persons, information, and perhaps more. Stewart (1947) included in his "Empirical Mathematical Rules Concerning the Distribution and Equilibrium of Population" a formula similar to gravity, but called it "potential." He also cited a much earlier author, Reilly (1929), who provided a "law of retail gravitation," but that was for explaining the market regions covered by cities of different sizes, not the transactions between them.

The term was picked up, and probably made much more visible, by Ben Bernanke in his Remarks at the meetings of the Eastern Economic Association in Washington, DC, February 20, 2004, when he was a member (but not yet Chair) of the Board of Governors of the Fed. See Bernanke (2004). He cited several authors as having documented the decline in volatility, the first being Kim and Nelson (1999) who cite McConnell and Perez-Quiros (2000), in a 1999 Fed working paper, as having documented the decline in a linear formulation rather than a structural shift. McConnell and Perez-Quiros, in turn, started their paper with "The business press is currently sprinkled with references to the 'death' or 'taming' of the business cycle in the United States." Neither of these papers used the term Great Moderation, or even the word moderation.

So it appears that the phenomenon represented by the Great Moderation was noted gradually over time and then documented by a number of scholars. The name for it as well as one of the more rigorous documentations of it were by Stock and Watson (2003).

Hines (1999) provided a good review of this history. Although several others had used this tool, Arnold Harberger made repeated use of it especially in Harberger (1954) applied to monopolies, in Harberger (1964a) applied to an excise tax, and in Harberger (1964b) applied to other distortions.

Although Chase (1964) referred twice to "Harberger's triangle," he did so in an edited volume where he was summarizing another of Harberger's papers that appeared there. The term Harberger triagle then did not appear in print, that I can find, until 1976, even though several authors cited Harberger's papers and his method. Then, in 1976, Bruno and Habib (1976) included

An alternative would be to use Harberger's (1964) measure based on the notion of the excess burden. If, in fact, in the above model we were to measure the area of the 'Harberger triangle' (ΔS) under the supply curve between L₁ and L₀, we would get ....

It is commonly alleged that the welfare costs of monopoly are the "Harberger triangles" generated by price-cost ratios that exceed unity [1, 2, 4, 5, 8, 10], but this approach has been recently challenged by Tullock [9].

Harberger triangles in trade
Harberger himself first used his triangles to measure the costs of monopoly, and later for taxes and other market distortions. He did not apply it to tariffs or other distortions of international trade. The first I have found to do that was Johnson (1958, p. 252). Without citing any prior authors at all, so I cannot tell whether he thought this was new, he used data on trade and tariffs to calculate the benefits to the UK of moving to free trade with Europe:

It will be approximately equal to the change in the value of imports from the Free Trade Area, multiplied by half the tariff rate previously levied. ... This is motivated in the usual way from change in consumer surplus and tariff revenue.

For some reason, however, trade economists have tended to prefer the term deadweight loss to identify the costs measured by Harberger triangles in the tariff context.

Hirschman (1964) also pointed out that his index differed from what had come to be called the Herfindahl index of industrial concentration only by Hirschman's inclusion of the square root. Herfindahl had introduced his index in Herfindahl (1950). In spite of the fact that Herfindahl himself acknowledged Hirschman's prior contribution, his index was named the Herfindahl Index by Rosenbluth (1955) and the name stuck, even though Rosenbluth later tried to correct the error. Today (June 2022), the Herfindahl index is said by Wikipedia to be "also known as Herfindahl-Hirschman index, and there is no entry at all for Hirschman index." Interestingly, NGram finds Hirschman index used most frequently since 1983, with Herfindahl used most frequently prior to that. Use of Herfindahl-Hirschman index parallels Hirschman index, but somewhat below it. I suspect that NGram includes Hirschman in its findings for Herfindahl-Hirschman. If so then it is clearly Herfindahl-Hirschman that has been most widely used since 1983.

As for the Hirschman index itself and its use for quantifying concentration of trade, it is difficult to search for it in Google Scholar without the Herfindahl, but I was able to find a few sources that used it. For example, Ng (2002), p. 587 said "The related measure used by UNCTAD is the concentration index, or Hirschman index (H)" and then provided the formula above.

• exchange rate stability
• monetary independence
• perfect capital mobility

The first to be used for something like this was trilemma, which I only learned about belately. Maury Obstfeld directed me to a passage in Irwin (2012), who had been alerted by Russell Boyer to an early draft of Friedman (1953). It, in a passage not included in the published version, said that the macroeconomic dilemma

has become a trilemma: fixed exchange rates, stable internal prices, unrestricted multilateral trade; of this trio, any pair is attainable; all three are not simultaneously attainable.

The term holy trinity was used with this meaning, but perhaps only once, as it mostly had other meanings even within international macroeconomics. The second, inconsistent trinity, appears to have been the first to be used more than once in published work, in response to the monetary crisis of 1971. The third, impossible trinity, and especially the fourth, trilemma, have been used with this meaning a great deal in recent years. I will deal with each in turn.

Holy Trinity
There are two threesomes within the literature of international finance that have sometimes been referred to by the term Holy Trinity. One threesome concerns the attributes that are needed for a stable international financial system:

Attributes:
• Adjustment
• Liquidity
• Confidence

The second threesome concerns the policy arrangements that may be used to achieve one or more of these attributes:

Policies:
• Exchange-rate stability
• Monetary independence
• Perfect capital mobility

The earliest use that I have found for Holy Trinity in the context of international monetary economics was a doctoral thesis, Høiberg-Nielsen (1983). This included (p. 116-117),

The aim of the present chapter is then to analyze, somewhat critically, the concepts of adjustment and liquidity in an international monetary system. These two concepts [adjustment and liquidity] were together with confidence, what we might call "the holy trinity" in the debate in the late 60's on international monetary reform.

The term Holy Trinity is of course widely used in a religious context, and also in many other contexts where a threesome is thought to be especially important. In economics, for example, Machlup (1965) and at least one other used it for the "objectives of a stable price level, full employment, and a faster growth rate." My search for the term in Google Scholar is hindered by its wide use in other contexts. But I have looked for it, as well as the other terms considered here, in some of the more widely cited works of both Mundell and Fleming, and I failed to find it.

My expectation that I would find it in Mundell was prompted by Rose (1994) who said (p. 1) "This paper is concerned with the compatibility of: fixed exchange rates; independent monetary policies; and perfect capital mobility, Mundell's 'Holy Trinity'." Note though that Rose uses Holy Trinity for the problematic threesome of policies, not the threesome of attributes. I have yet to find any earlier source for this interpretation.

On the contrary, I found Eichengreen (1993, p. 621) saying, "In the 1960s and 1970s, most of the literature on the Bretton Woods system was organized around the holy trinity of adjustment, liquidity, and confidence." One might have expected Rose and Eichengreen to agree on the use of the term, since they were both at Berkeley, but apparently they did not. Eichengreen cited Mundell (1969), which did include a section headed "Liquidity, Adjustment, and Confidence," but Mundell did not mention any trinity, at least in that source.

Inconsistent Trinity
The earliest use of any trinity to refer to the threesome of policies was Wallich (1972). In a section headed Inconsistent Trinity, he wrote (pp. 6-7):

This sequence of events dramatically illustrates a fact well known to economists but never recognized in our institutional arrangements or avowed principles of national policy: fixed exchange rates, free capital movements, and independent national monetary policies are inconsistent. In certain situations, such as those of 1969-1971, one of the three has to give. A country can have any two of the trinity.

Given his prominence -- Wallich had been a member of the US President's Council of Economic Advisors and was later a governor of the Federal Research Board -- I'm not surprised that his use of the word trinity for this threesome led others to use it, even if some may have also called the trinity "holy."

Impossible Trinity
The origin of Impossible Trinity is easier to find, if not necessarily its meaning. Reisen (1993) published "The Impossible Trinity in South-East Asia," in International Economic Insights. Unfortunately, I have been unable to access the paper itself, and therefore I cannot say with certainty how he used the term. What I do have is the comment by Rose (1994, p. 26): "Reisen (1993) believes that the Holy Trinity (which he refers to as the Impossible Trinity) has been possible in South-East Asia." Assuming that Rose's interpretation of Holy Trinity was also Reisen's interpretation of Impossible Trinity, we have the latter as clearly meaning the trio of policies.

That the Impossible Trinity was the policy threesome was confirmed by Frankel (1994), who cited Reisen, and also by Borensztein and Ostry (1994) who did not. So at least until I can confirm from the source that Reisen used the term for the policy threesome, I am comfortable attributing it to him for its current use. Since his own publication seems to be a bit obscure, I am inclined to credit others, such as Rose and Frankel, for the term's subsequent popularity.

Trilemma
It seems that the most common term in today's literature for the difficulty of the threesome of policies is trilemma. That word has meaning in standard English for any three objectives that are difficult to achieve together because any two preclude the third. And the word has been used a great deal in contexts other than international finance, making it -- again -- hard to identify its first use in international finance for the policy threesome considered here.

My own search failed to find it before 1997, but again Maury Obstfeld alerted me to his paper Obstfeld (2020) where he cited columns by Friedman both in Newsweek, Friedman (1979), and in The Economist, Friedman (1983), that used the term. It was unclear in the first of these that this was the same trilemma discussed here, but in the second it was very clear indeed:

...forced those of us who have written on this subject more recently to expand Keynes's dilemma to a trilemma. A country is compelled to choose two of the following three desirable objectives: stable prices (or, more generally, an independent monetary policy), a stable exchange rate (or, more generally, a predetermined path of exchange rates), freedom from exchange controls.

I found trilemma first in scholarly published work with its clear current meaning by Obstfeld and Taylor (1997). They said (p. 2):

Secular movements in the scope for international lending and borrowing may be understood, we shall argue, in terms of a fundamental macroeconomic policy trilemma that all national policymakers face: the chosen macroeconomic policy regime can include at most two elements of the inconsistent trinity of (i) full freedom of cross-border capital movements, (ii) a fixed exchange rate, and (iii) an independent monetary policy oriented toward domestic objectives. [Italics in original.]

To sum up, based on the sources that I have learned of, the four terms were introduced into the scholarly literature of international finance, with the current meaning of the threesome of policies above, by the following:

First, in a model with increasing returns to scale (IRS), p. 957;

This gives us our first result on the effect of the home market. It says that if the two countries have sufficiently dissimilar tastes each will specialize in the industry for which it has the larger home market.

Nonetheless, the analysis does seem to confirm the idea that, in the presence of increasing returns, countries will tend to export the goods for which they have large domestic markets.

It is worth noting also, as Krugman did in his final sentence, that these results were anticipated by Linder (1961) and by Grubel (1970).

Linder did stress the importance of the demand in the home market in order for a country's industry to succeed and export (p. 17): "...a country cannot achieve a comparative advantage in the production of a good which is not demanded on the home market." But rather than stressing IRS, he viewed production functions as differing across countries in response to differences in demand (p. 90): "... the production functions of goods demanded at home are the relatively most advantageous ones." And Linder never spoke of a home market effect.

Grubel, in a larger discussion of intra-industry trade, considered products differentiated by quality, with low-quality goods demanded more by low income consumers. Allowing then for IRS as well as differences in the distribution of income across countries, he noted that a country with a preponderance of low-income consumers would "specialize in the production of the low price and low quality model, supplying its own population and exporting to meet the demands of [the other country's] population with below average income."

Such a model was certainly provided by Puga and Venables (1995) who also included hub-and-spoke integration as a keyword for their paper. They also cited Baldwin (1994) as discussing such arrangements, although again, as I have so far been unable to access Balwin's book, I don't know whether he even used the term or provided a model. Baldwin was cited by one author, Stawarska (1998), as "the author of the hub and spoke integration model."

The second item that has come to be called an ideal price index is what can be derived from an explicit utility or production function as the minimum cost, given the set of individual prices of goods or inputs, of a unit of utility or output. The specific formula therefore depends on the utility or production function chosen, but most commonly in recent years these have been assumed to be CES, often with a variable number of arguments as in the Dixit-Stiglitz function.

The arguments of this function can be countable, but most often today they are taken to be in an uncountable set, over which both objective function and ideal price index are integrals. For example, using the notation of Bergstrand et al. (2019), let utility in situation i (year, country, etc.) be

The term ideal price index has been used for objective functions ranging from Cobb-Douglas, through 2-good and n-good CES, to functions like this with additional arguments for other categories of goods. So unlike Index above, there is no single agreed-upon formula for this version of the ideal price index.

Interestingly, this second version, despite its name, is not really an "index" at all in the usual sense. Indexes are needed when a simple average would not be meaningful, as when averaging across items with different units of measurement. Thus the initial Index above in necessarily a ratio, comparing prices across two situations. Neither numerators nor denominators within the expression have any meaning by themselves, but only in relation to their counterparts. In contrast, Price_i is defined for just the single situation i. If the objective function is a production function, then it is the minimum cost of a unit of output, which is well understood. But if it is a utility function, then it is the cost of a unit of utility, which has never been intended to have meaning by itself.

Therefore, what is today routinely called an ideal price index only becomes an actual price index when used in a ratio, such as (Price_i / Price_j), comparing prices in two different situations. It should be noted, too, that even this ratio will only be meaningful if the utility or production functions from which Price_i and Price_j are derived are linearly homogeneous and therefore, for utility, homothetic.

Now where did all this come from? For the older Index, that is fairly easy. It was Fisher (1922) who suggested and named it, though the formula itself had been suggested much earlier by Bowley (1899). Bowley called it (p. 641) "The best method theoretically for measuring 'aisance relative'." Aisance in French apparently means ease or affluence. For decades after Fisher named it, the square-root formula has been used and usually referred to as the "Fisher ideal price index."

The first effort I have seen to try to do better than Fisher by deriving a measure of prices from an objective function was Samuelson and Swamy (1974). They continued to use the term ideal price index but only for Fisher's formula, not for their own. To improve on this, they defined by a price index and a quantity index from general objective functions, and showed them to be dual to one another.

Samuelson and Swamy do not call their own indexes "ideal." Recognizing instead their dependence on scale or income, they say (p. 568)

We cannot hope for one ideal formula for the index number: if it works for the tastes of Jack Spratt, it won't work for his wife's tastes.

Most often cited by those who use things like Price_i above are Sato (1976) and Vartia (1976), whose Sato-Vartia weights allow them to give appropriate weights to different prices. Both Sato and Vartia did call their indexes "ideal," but as "ideal log-change index numbers" and, in the case of Sato, an "ideal log-change price index." Neither spoke of an ideal price index without the "log-change" qualification. Vartia referenced a 1975 discussion paper by Diewert that also deals with "ideal log-change index numbers." Diewert (1978) later examined several alternative price indexes, including what he called the Vartia index, but he used the word "ideal" only for the Fisher index. And in later work he showed that the Fisher index would be what he called "exact," for a unit cost function that is quadratic. His "exact" seems to be what is now called "ideal," in that it can be derived from a specified objective function.

Considering the role of the Price_i form of the ideal price index in measuring the importance of variety for welfare, one might have expected it to have been derived by Dixit and Stiglitz (1977). They did indeed derive it (for a sum of varieties, not an integral), and they called it a "price index," but they did not call it "ideal."

It is only in 1985 that I find sources using the term ideal price index with the meaning of Price_i. Both Obstfeld (1985) and Jagannathan (1985) used the term and attributed the idea to Samuelson and Swamy (1974), even though neither those authors -- nor any since that I can find -- had used the term in print. From the published record, I cannot infer who among all these authors and others may have begun using the term in conversation.

The term has certainly caught on in recent years, but interestingly it was not used in two of the most influential papers that used the concept itself. Feenstra (1994) and Broda and Weinstein (2006) -- both known for using it to quantify the benefits from increased variety due to international trade -- used the index but not its name. Feenstra (p. 158) spoke of an "exact price index for the CES unit-cost function." Broda and Weinstein followed Feenstra in calling it the "exact price index," and used ideal price index only for the Fisher formula.

Well before Broda and Weinstein (2006), however, I find numerous uses of ideal price index to mean something like Price_i, and I find even a few before Feenstra (1994) such as Obstfeld (1985) and Jagannathan (1985) mentioned above. By now the term seems to have become far too standard for most authors to mention any source or sometimes even to explain it. As just one example, I went through the 37 appearances of ideal price index found by Google Scholar for the year 2003, and eleven of them were a variant of Price_i. I have not done the same for very recent years, as the term is now used more than 100 times each year, still often with the qualification "Fisher," but also often without and presumably something like Price_i.

As for the concept, Bhagwati credited Johnson (1953, 1955) with identifying a form of immiserizing growth and also with working out the conditions for Bhagwati's form of it in an unpublished note. Long before both of them, Edgeworth (1894, p. 39-40) had shown, though only by example, that increased production of exports could so reduce their relative price that the country would lose or, as Edgeworth put it, be "damnified by the improvement." Perhaps he should have called it "damnifying growth."

Edgeworth in turn credited Mill (1821) with noting the possible worsening of the terms of trade, although Mill apparently incorrectly equated this worsening with a necessary decline in welfare. (I have not read Mill and am taking Edgeworth's word for this.)

Some have also cited Say (1803) as an early advocate of infant industry protection. I have searched that document and do not find the basis for this. There is a discussion of reasons for using tariffs (mostly called "duties"), but none seems to capture the infant industry reasoning.

Most cite List (1841), writing in German, as providing the first explicit case for infant industry protection, and this seems right. In Chapter 12 of the 1909 translation by Sampson S. Lloyd, he said:

It is true that protective duties at first increase the price of manufactured goods; but it is just as true, and moreover acknowledged by the prevailing economical school, that in the course of time, by the nation being enabled to build up a completely developed manufacturing power of its own, those goods are produced more cheaply at home than the price at which they can be imported from foreign parts.

It was Mill (1848) who made the case first in English:

The superiority of one country over another in a branch of production often arises only from having begun it sooner. .... A country which has this skill and experience yet to acquire, may in other respects be better adapted to the production than those which were earlier in the field. .... But it cannot be expected that individuals should, at their own risk, or rather to their certain loss, introduce a new manufacture, and bear the burthen of carrying it on until the producers have been educated up to the level of those with whom the processes are traditional. A protecting duty, continued for a reasonable time, will sometimes be the least inconvenient mode in which the nation can tax itself for the support of such an experiment.

Even on this point I continue to think my opinion was well grounded, but experience has shown that protectionism, once introduced, is in danger of perpetuating itself... and I therefore now prefer some other mode of public aid to new industries, though in itself less appropriate.

The term "infant industry protection"
Neither Mill nor any of the earlier authors used the term infant industry protection, but instead spoke in various ways of firms and industries that were newly established. Hamilton spoke only once of an "infant manufacture" and List only once of "infant manufactures." The earliest mention I have found of anything like infant industry protection was an anonymous piece in the October 1854 issue of The North American Review, apparently stating the views of this journal with regard to protection. On page 479 appeared the following:

But the necessities and the requisite independence of a new people rising into greatness in a new world, inexorably demanded protection for its infant industry, and the aid of government in support of the various arts and manufactures during the period of their weakness and immaturity.

I find no further occurrences of the phrase infant industry until the period 1880-1885. Taussig (1883) made the case for what he only called "young industries," but I found four other authors, around the same time, referring positively or negatively to protection of "infant industries." Sumner (1985), for example, in his Chapter V on "Sundry Fallacies of Protectionism," listed his first as "That infant industries can be nourished up to independence and that they then become productive." The idea, together with the association with infant rather than young, new, or immature industries had become the standard term. Ely (1888), in a collection of articles originally written for the Baltimore Sun, devoted a chapter to "The Infant Industry Theory of Protectionism Further Considered."

The conditions for "infant industry protection"
Also associated with infant industry protection are two "tests" to be satisfied in order for protection to be justified. These were identified and named by Kemp (1960) as the Mill Test and the Bastable Test. Mill's test was that the protection be temporary, as Mill (1848) added in his 7th edition:

...protection should be confined to cases in which there is good ground of assurance that the industry which it fosters will after a time be able to dispense with it; nor should the domestic producers ever be allowed to expect that it will be continued to them beyond the time necessary for a fair trial of what they are capable of accomplishing.

The onus of proof rests with those who advocate their employment, and they are bound to show (1) that the industry to be favoured will after a time be self-supporting, and (2) that the ultimate advantage will exceed the losses incurred during the process.

These new issues are thus simultaneously, profoundly and inseparably both domestic and international. If I may be permitted a coinage whose very cacophony may help provide emphasis-these issues are "intermestic."

A search through Google Scholar finds the term J-curve used frequently in other contexts, but the first use of the term applied to effects of a currency devaluation seems to have been at a 1971 conference (the proceedings of which I have not yet seen) and by Posner (1972). Both of these use the term as though it is already familiar, so I suspect that it had entered common use before this in the economic press.

It was Little (1949a, 1949b) who first called it the Kaldor-Hicks criterion. In 1949a, he credited Hicks with going beyond Kaldor by explicitly using it as a criterion for an increase in welfare, and then, throughout the last half of the paper, called it the Kaldor-Hicks criterion. Later the same year Little (1949b) addressed Scitovszky's criticism, and used that terminology throughout.

Some (including myself, until I learned better) have called it the Lerner-Pearce diagram, giving credit also to Pearce (1952). Bierwag (1964), in footnote 2, p. 57, said "This diagram is often called the Lerner-Pearce diagram..." citing Lerner (1952) and the Pearce's comment in the same issue of the the journal, and said "it has been widely used in international trade theory." That may be, but he cites only Findlay and Grubert (1959) plus the preface to the Japanese edition of Harry Johnson's International Trade and Economic Growth, which I have not attempted to find.

In fact, although Pearce (1952) was debating Lerner regarding the likelihood of factor price equalization, he used unit isoquants, not unit-value isoquants, for the purpose. Since these do not align in equilibrium with a single unit isocost line, they cannot be used in the same way, and they do not achieve the essential simplicity of Lerner's construction. Pearce did use the diagram with unit-value isoquants in his comment on Lerner (1952), but there he wass clearly following Lerner.

In the context of economics, I find the level playing field mentioned first for banking, and for financial markets more generally, as these were deregulated around 1980. As regulations were relaxed for some financial institutions, other institutions sought similar relaxation for themselves. These concerns extended especially to international financial markets, where differences in national regulations put some countries' firms at a disadvantage.

I find no use of the term level playing field in the context of international trade until 1982, when Bergsten and Cline (1982) cited Cline as noting that as comparative advantages become small due to growing similarity of factor endowments and technologies, differences in government policies and regulations become increasingly important in determining trade. They then say (p. 24):

Under these conditions trade performance becomes less a matter of inherent comparative advantage and more one of determination by the type of strategic behavior associated with imperfectly competitive markets. A "level playing field," with international rules of behavior, becomes especially important where comparative advantage is arbitrary.

Or we could simply match other nations' barriers and subsidies (and expect them to match our own) in an attempt to create a "level playing field" for free trade.

For they assume the total elasticity of demand of each country to be less than unity, and on average to be less than one half, throughout a large part of its schedule. Nothing approaching this has ever occurred in the real world: it is not inconceivable, but it is absolutely impossible. [p. 354, bold italics added]

The next appearance of the condition was twenty years later still, in Lerner (1944). The context was very different from that of Marshall, as Lerner was not looking at the market for international exchange of goods. Rather, his purpose was to determine whether a mechanism for maintaining full employment through the gold standard would be stable. The mechanism would start with a fall in the price level due to the outflow of gold associated with a negative trade balance. To be successful, that fall in price level would need to reduce the trade deficit, thus increasing aggregate demand. But then he said, "There are other circumstances that render the automatic maintenance of full employment still more precarious." His reason was that the direct effect of a fall in prices is to decrease the value of a given quantity of exports, not increase it, and this then needs to be offset by sufficient increase in export quantity and/or decrease in import quantity in order to cause net exports to rise. For this to be true, he said,

The critical point is where the sum of the elasticity of demand for imports plus the elasticity of demand for exports is equal to unity.

A number of authors have chosen to name the condition after Robinson as well as Marshall and Lerner, presumably on the grounds that Robinson (1937) preceded Lerner in examining the same question of a devaluation and the balance of trade. Indeed, she did it more formally in a mathematical footnote that derived the change in the trade balance as

k{Eq[ε_f(1+η_h)/(ε_f+η_h)] − Ip[η_f(1−ε_h)/(η_f+ε_h)]}

ε_f+ε_h > 1

There is one other source that might have been expected to reach the result before Lerner (1944): Machlup (1939-40), who dealt in great detail with "The Theory of Foreign Exchanges." He applied supply-and-demand analysis to the exchange of currencies, and he noted that the supply curve for foreign exchange could be backward bending, changing some of market's comparative static implications. However, he did not mention that if both demands were sufficiently inelastic, then the equilibrium would be unstable. Therefore he did not find his way to the third familiar implication of the Marshall-Lerner condition: the stability of the market for foreign exchange.

From all of this, the name Marshall-Lerner condition seems appropriate, since both of those authors stated the condition, independently and in different contexts, and no other author seems to have done so before them.

Who gave it the name? Searching the literature around this time, I find Polak (1947) citing the condition, but only as "the well-known formula." Likewise Haberler (1949) presented the condition and included the following:

This condition is usually expressed in terms of elasticities of demand for imports and of demand for exports. It is now often referred to as the "Lerner condition", although it has been mentioned by Marshall and formulated with even greater precision later by Mrs. Robinson.

Our results permit the following conclusions:
(a) The "Marshall-Lerner" condition for devaluation to have a favorable effect on the trade balance (sum of the two elasticities larger than unity) holds only when imports are equal to exports.

In his example of the duty on Dutch and Belgian beer, Meade said (p. 66):

What we need to do, therefore, is to take all the changes in international trade which are due directly or indirectly to the reduction in the Dutch duty on Belgian beer; value each change at its supply price in the exporting country and weight it by the ad valorem rate of duty in the importing country; add up the resulting items for all increases of trade and do the same for all decreases of trade; if the resulting sum for the increases of trade is greater than that for the decreases of trade, than [sic] there is an increase of welfare; and vice versa.

Meade's main point was that one should not look only at the product on which the tariff is being reduced, but rather at all changes in trade that will be caused, both positive and negative, by that change. Of course if tariffs on all other products were universally zero, then the contributions to his calculation for them would also be zero. Hence, this is a simple way of taking account of the second-best nature of a tariff reduction when tariffs on other products are not zero.

In his Appendix II (pp. 120-121), Meade formalized his calculation and called it "an index of the change in world welfare," which he derived as

      dU = uΣ_i{dx_i(p_i−c_i)}

where U was world utility, u was the common marginal utility, dx_i was the change in trade of good i, p_i was price to consumers, and c_i was price (i.e., cost) to producers.

It seems to have been Vanek (1965, p. 15) who first called this the Meade Index.

Moreover, available data from different sources on the same variable -- "mirror statistics" -- often differ. Large relative discrepancies can be found between various series...

While the technique could be and probably is applied to data other than international trade, it is most frequently used for trade, and especially for trade with countries like the Soviet bloc and China where trade data, in the past, were unavailable or unreliable.

The term itself can be misleading, since when applied to a country it may be interpreted as favoring that country over others. In fact, the meaning is rather to not treat the country worse than others. It may have been this tendency to misinterpret that led the United States to replace the term with permanent normal trading relations in 1998, during the lead-up to granting China permanent MFN treatment in 2000.

Erler (1956) said that the practice of treating trade partners no worse than others goes back to the 15th century. Erler wrote in German, so I thank my friend Willi Kohler for providing the following:

He argues that the first appearance of MFN was in the 15th century, when the territorial state was about to replace the city states, such as the Hanseatic League, that had so far dominated trade in northern and central Europe. The trade policy stance of these territorial states would soon be dominated by mercantilism. But this did not preclude MFN treatment.

For instance, a treaty signed on August 17, 1417, by Henry V of England and Duke Johann of Burgundy stipulates that English captains shall be allowed to land their ships in Flemish ports "in the same way as the French, the Dutch and the Scottish captains would do." Erler explicitly (though perhaps not too convincingly) calls this an instance of MFN. [Erler (1956, p 52)]

A further instance was the London Trade Agreement (sic! Londoner Handelsvertrag), signed on July 22, 1486 by Henry VII of England and Duke Franz of Brittany. It stipulates that English merchants, when doing business in Brittany, shall enjoy the exact same liberties/freedoms as do merchants from any other state who maintain commercial relationships with Brittany. Further, they shall be treated with the same "caution and graciousness" as these other merchants. This pretty much seems like true MFN treatment. [Erler (1956, p 53)]

A source that I found online but have been unable to learn the author of (it seems to be a chapter from a dissertation in India) says that the concept of MFN has been used since the middle ages. But its first use by more or less that name was in the Treaty of Utrecht, which was actually a group of several treaties ending the War of the Spanish Succession 1713-1715. One of those, the Treaty of Peace and Friendship, included the following passage:

It is further agreed and concluded as a general rule, that all and singular the subjects of each kingdom shall, in all countries and places, on both sides, have and enjoy at least the same privileges, liberties, and immunities, as to all duties, impositions, or customs whatsoever, relating to persons, goods, and merchandizes; ships, freight, seamen, navigation and commerce; and shall have the like favour in all things as the subjects of France, or any other foreign nation, the most favoured, have, possess, and enjoy, or at any time hereafter may have, possess, or enjoy. Source

This empirical evidence has lead [sic] to the development of what might be called the new new trade theory, that is to say new trade models modified to allow for a more sophisticated view of firms. One branch of this theory has been particularly successful in accounting for the new empirical findings that was started by Melitz (2003); Bernard, Eaton, Jensen and Kortum (2003) also present an early model.

As I search for use of the term new trade theory in Google Scholar, I find nothing at all before 1984. In that year there was only one source that uses these words, Borrus, Tyson, and Zysman (1984), and it wasn't obvious that they thought this was a name for the recent literature but only a convenient way of directing attention to it. Only in 1986 do I find the expression appearing again, and now it showed up in five publications in that year. None of the authors in that year spoke as if they were naming this recent literature themselves. But as Krugman (1986a) used it several times, I am inclined to give him credit for popularizing the term. One other author, and in a volume edited by Krugman, spoke of "the so-called 'new' trade theory," perhaps having heard Krugman and others speak of it.

For many, including perhaps Krugman himself, the new trade theory is most closely associated with his writings, even though many others contributed importantly to it. One might have expected that "Krugman" would have taken his place alongside Ricardo and Heckscher-Ohlin in the name for a trade theory. But that did not happen, perhaps because Krugman himself led with the term new trade theory. There is of course a Krugman Model, but that is only one among many models, by Kruman and others, that are included the the new trade theory.

Despite its name, MFN is not a special trading privilege or reward, nor is it the most favorable trade treatment that the United States gives its trading partners. Rather, MFN refers to the normal trade treatment that the United States gives to nearly every country in the world. Because there are only six countries in the world to which the United States does not give MFN status, MFN denotes the ordinary, not the exceptional, trading relationship. Furthermore, the United States extends better than MFN treatment to 150 countries and territories ....

Wikipedia once explained the change as follows, but gave no source (and it no longer appears):

The impetus for the change in terminology came from irritation voiced by some Americans that various totalitarian governments around the world enjoyed being a MFN of the United States.

... chapt. IV, pp. 157-184, which introduced, on the basis of constant international practice analyzed therein, the doctrine of "odious" debts of an overthrown or displaced government ...

This does not mean that the concept in international law was new at that time. Cahn (1950) included a footnote covering almost a full page citing dozens of sources on the topic, only the last and most recent of which was Sack (1927).

Much of it had been designed to form part of an Appendix to a volume on International Trade, on which a good deal of work was done, chiefly between 1869 and 1873. ....the main body of the present Appendix is reproduced with but little change in substance from that part of the mss. which was privately printed and circulated among economists at home and abroad in 1879.

He did not however name it. He referred to his curves throughout only as OE and OG, for England and Germany respectively. Only once did he even use the world "offer" in connection with these curves, saying "E will be prepared to offer only OM′′ of her bales in return for P′′M′′ bales from G."

The best candidate I find for having named the offer curve is Edgeworth (1894). This article was published in three parts, in the second of which, Edgeworth (1894) Part II he showed the curves in various configurations and used the verb "offer" to explain what they represented. Then in the third part, Edgeworth (1894) Part III, discussing a similar diagram of Auspitz and Lieben (1989), he said "Accordingly their supply- or offer- curve is never inelastic in our sense of the term...." That, to me, qualifies Edgeworth as having introduced the term.

Several subsequent authors also used the term, perhaps following Edgeworth or perhaps coming to it on their own. Some used it not to represent international trade, but rather for the supplies and demands of individual consumers. Bowley (1924) however was quite explicit, both in using the diagram which he said had been used "by many writers in the fundamental treatment of foreign trade" (p. 5), and in calling it the offer curve (p. 7). He cited Edgeworth's Mathematical Psychics from 1881 for the concept and mathematics of the equilibrium, but apparently not for the offer curve.

The only other author who deserves mention here, however, is Lerner (1936). In this classic article on the symmetry between import and export taxes, his argument was built entirely on offer curves. In his opening sentence (p. 306) he stated as one of his purposes that he "demonstrates the applicability of Marshall's 'offer curve' apparatus to the elucidation of this problem." His use seemed to assume that readers were already familiar with both the diagram and the name for it, although his use of the quotation marks around it suggests that he didn't see the name as already universally adopted. But the use of the term in this still widely cited paper has surely secured its place in the lexicon of economics.

Precautionary Principle: Environmental policy is not limited to preventing immediate threats and removing damage that has already been caused, but demands that considerable efforts have to be made in order to prevent environmental damage from occurring in the future.

As the term has been used more recently, however, it includes not just taking or blocking action to prevent harm, but specifically doing so even when the science has not conclusively demonstrated the need to do so. The Precautionary Principle in this modern sense seems to have appeared first in the 1987 North Sea Conference. Its Second North Sea Ministerial Declaration includes the following under paragraph VII:

Accepting that, in order to protect the North Sea from possibly damaging effects of the most dangerous substances, a precautionary approach is necessary which may require action to control inputs of such substances even before a causal link has been established by absolutely clear scientific evidence;

The term came into wider use in the 1992 meeting of the United Nations Conference on Environment and Development. The Rio Declaration from that conference, Agenda 21 (1992), again spoke repeatedly of a "precautionary approach." Paragraph 35.3 states the following:

In the face of threats of irreversible environmental damage, lack of full scientific understanding should not be an excuse for postponing actions which are justified in their own right. The precautionary approach could provide a basis for policies relating to complex systems that are not yet fully understood and whose consequences of disturbances cannot yet be predicted.

The two terms Precautionary Principle and Precautionary Approach have both been in common use since the late 1980's. Google NGram reports the first of these terms appearing more than four times as often as the second when they peaked in the early 2000's. So it seems that Precautionary Principle is now the more standard term.

Suppose four-fifths of all the money in Great Britain to be annihilated in one night.... Must not the price of all labour and commodities sink in proportion...?, What nation could then dispute with us in any foreign market...? Therefore, must this bring back the money which we had lost. Where, after we have arrived, we immediately lose the advantage ... and the farther flowing in of money is stopped.

Although Hume is today routinely credited with this idea, several other authors anticipated it, if not as clearly. Viner (1937, p. 74) credited Cantillon (1730) where "the self-regulating mechanism is clearly and ably expounded." I have tried to follow Cantillon's exposition, and I am not sure that I would have understood the mechanism from that.

The mechanism has often been called just the specie flow mechanism, though that de-emphasizes the role of prices, the role of which was not always recognized by other authors. The term price-specie flow mechanism entered the literature with Angell (1926), who dealt with it in detail.

The general inflation which has taken place during the war has lowered this purchasing power in all countries, though in a very different degree, and the rates of exchanges should accordingly be expected to deviate from their old parity in proportion to the inflation of each country.
   At every moment the real patity between two countries is represented by this quotient between the purchasing power of the money in the one country and the other. I propose to call this parity "the purchasing power parity." [Italics in original.]

The classic paper establishing that trade policy is only second best in general for dealing with domestic distortions was Bhagwati and Ramaswami (1963), who did not cite Meade. However, they also did not use the term second best, and the point of their contribution was to argue for policies superior to trade policies. The term second best was adopted by Lipsey and Lancaster (1956), attributing it to Meade, but their application to tariffs was concerned only with the optimal level of one tariff when another is non-zero. By 1969, in Bhagwati et al. (1969), Bhagwati too was using the second best terminology, but again his and his co-authors' main point was that tariffs are not even second best but only at most third best when other policies can be adjusted. Thus trade economists have generally used the second-best argument against protection rather than for protection.

If policies superior to tariffs are not available, however, the argument may become one in favor of protection. Thus in its simplest form, a government that is unable to levy any other kind of tax but requires revenue in order to function will use tariffs no matter how far down the list from first-best tariffs may lie. This has presumably been understood since long before the distorting effects of tariffs were examined by economists. And even here, the argument should have been subject to the caveat that the benefits from the government activity must outweigh the welfare losses due to the tariff.

This is equally true in more complex cases. The infant industry argument depends on distortions that prevent infant industries from reaping the full benefits of their production. The first-best policy is to correct or offset that distortion, perhaps by a production subsidy. But if production subsidies are unavailable (not just rejected politically, since that should in principle apply even more to a tariff, if it were fully understood), then a second-best tariff will be beneficial if not too large.

That difference between what it costs the government to print a note and a foreigner to procure it is known as "seigniorage" after the right of the medieval lord, or seigneur, to coin money and keep for himself some of the precious metal from which it was made."

The earliest use I find of the term itself is in Krüger (1926):

The accusation that German industry in trying to increase production is practising social dumping against foreign countries is untenable in view of the working hours in those countries and the additional burden imposed upon the national production of Germany by defeat.

That ambiguity does not apply, however, to the use I find of the term in 1928. A bibliography of "Recent Labour Legislation" in International Labour Review 19(4), April 1929, pp. 575-619 lists a book in German, Baer (1928) with the title Das soziale Dumping and a summary that begins:

Dr. Baer has done useful work by his attempt to elucidate the idea underlying the expression "social dumping" and his examination of its practical applications. His book is arranged in three chapters ; the first deals with "social dumping" in the general acceptation of the term, i.e. exportation on the basis of a comparative advantage attributed to lower conditions of labour (lower wage level, longer hours of work, smaller cost of social services, etc.) in the exporting than in the importing country.

However, the expression stylised facts did not appear in Kaldor's article, nor in its reprint. Instead, Kaldor said on page 591

A satisfactory model concerning the nature of the growth process in a capitalist economy must also account for the remarkable historical constancies revealed by recent empirical investigations.

How, then, did it come about that so many have attributed the phrase stylised facts to Kaldor (1957)? I suspect that he probably did use the term in his early draft and in his presentations of his work to colleagues, who may then never have felt the need to read the published version. And I would go on to suggest that its removal from the published version may have been at the insistance of the editor, who felt that the work should be based on true facts, not stylized ones, and may have pushed Kaldor to include their sources.

However, I do find Kaldor using the term explicitly in Kaldor (1961) where he seemed to be introducing the term himself for the first time in a passage that nicely explained why he found it useful:

Hence the theorist, in choosing a particular theoretical approach, ought to start off with a summary of the facts which he regards as relevant to his problem. Since facts, as recorded by statisticians, are always subject to numerous snags and qualifications, and for that reason are incapable of being accurately summarized, the theorist, in my view, should be free to start off with a 'stylized' view of the facts - i.e. concentrate on broad tendencies, ignoring individual detail, and proceed on the 'as if' method, i.e. construct a hypothesis that could account for these 'stylized' facts, without necessarily committing himself on the historical accuracy, or sufficiency, of the facts or tendencies thus summarized.

This is an excellent justification not just of the term but also for using information that does not quite qualify to be called "facts." Indeed, economic data when Kaldor was writing were much scarcer and probably less accurate than they are today, but they were no less useful for motivating understanding of the world. Sadly (in my view), the term stylised facts has become widely used, and it is often applied in situations where the facts are just facts.

I find the first use of a form of the word in the context of international trade policy in Wijkman (1986) who, however, wrote it as "re-tariffication" (p. 47):

A likely outcome might consist of phasing out quantitative restrictions, either through negotiating their elimination on a reciprocal basis or by replacing them by tariffs representing an equivalent level of protection ('re-tariffication').

The earliest appearance that I find is in Zietz (1988) who advocated its use in negotiations on trade barriers in agriculture. Whether others were already using the term at that time, I don't know, and it is certainly true that others were advocating the substance of tariffication, though without using the word. Wolf (1985), as an early example, was advocating the replacement of quotas by tariffs as a means of "unraveling" the Multi-Fibre Arrangement.

The term came very much into its own in 1989, when the United States tabled a proposal to use tariffication in the Uruguay Round negotiations on agriculture. I have not been able to access the US document itself to see whether it used the term, but around the same time, in writings by others about the US action, the term was certainly used, if not with approval. Economist (1989) called it a "monstrous word":

The farm negotiations will resume in earnest next week. This time they look more promising, thanks to American proposals for "tariffication". That is a monstrous word for a sensible idea: the conversion of import quotas, variable levies, sluice-gate prices and all other border measures on farm trade into equivalent tariffs.

Having introduced the expression in the book, Marshall then used it in subsequent discussions, but he did not use it exclusively. He seemed to alternate between "terms of trade" and "rate of interchange," two expressions that seemed to be synonyms as he used them.

There is slight uncertainty as to whether this was Marshall's first use of the expression. This is because it also appeared in Appendix J of the same book, which a footnote explained was largely written much earlier, between 1869 and 1873, and which was "privately printed and circulated among economists at home and abroad in 1879." (p. 330). However, Appendix J with only very few exceptions does not use terms of trade, but rather alternates between "rate of interchange" and "exchange index." It seems likely that the few (I only found two) occurrences of terms of trade in that appendix were added when it was presumably revised for its 1923 publication. This is supported by the fact that terms of trade does not appear at all in the 1920 8th edition of Marshall's (1890) Principles.

Was Marshall the first to use the term? Taussig (1927) said so, citing Marshall (1923). And I have confirmed that Mill (1848) did not use the term. That of course leaves open a great many others who might have. But from the way Marshall introduced the term, it appears that he, at least, thought it was new.

Variations on the Terms of Trade

Taussig (1927), after explaining Marshall's preference for "terms of trade" over "rate of exchange," went on "to reduce still further the possibilities of misunderstanding" by refining the expression as barter terms of trade, emphasizing that it referred to the rate at which goods are exchanged for other goods. Taussig also distinguished net and gross barter terms of trade, the latter allowing for total amounts paid even when they differ from prices due to trade imbalances that might arise from, say, reparation payments.

Viner(1937) argued that the classical economists were concerned not just with the rates at which goods exchanged for one another, but also with the rates at which factors exchange, through their production of goods and trade. He therefore introduced the factoral terms of trade, both single and double.

Finally, Dorrance (1948) suggested income terms of trade as an alternative to all the others, which he argued gave a misleading indication of the extent to which a country was gaining from trade when markets were in disequilibrium, as he said had become more common in the mid-20th century. A rise in a country's barter terms of trade, due to a rise in its prices relative to the price of imports, could be harmful if it mainly caused a fall in the quantity it was able to sell. The income terms of trade, because it related the value of exports -- price times quantity -- to the price of imports, would correctly record a decline if the price increase was more than offset by a quantity decrease.

To summarize, let p_X, X, A_X be the price, quantity, and productivity of factors producing exports respectively and p_M, M, A_M be the same for imports. We then have:

Up or Down

As defined above, a rise in the terms of trade is an "improvement," in the sense that the country is getting more in return for what it exports. That has been the convention followed by most authors, who have defined it as p_X/p_M, but not all. Some have defined it as p_M/p_X, in which case a decline in the terms of trade is an improvement.

Marshall himself treated the terms of trade as a property of the transaction, not of either country, and thus his terms of trade was just the relative price of two goods, the identities of which were arbitrary. Also, a great many of those who have used the concept of the terms of trade have not needed to define it quantitatively, since they could speak simply of the terms of trade improving or deteriorating. But others have needed to incorporate the terms of trade into an economic model or report it as empirical data, and for either purpose it was necessary to choose either p_X/p_M or p_M/p_X.

The first to do this was Taussig (1927), who spoke of and reported data for the terms of trade of Great Britain, Canada, and the United States. For each he chose to define it as p_M/p_X, with the result that when his curves declined, that was beneficial for the country. Viner (1937) made the opposite choice, remarking in a footnote (p. 558) that

This reverses Taussig's procedure, where a rise in the index indicates an unfavorable movement of the terms of trade. No question of principle is involved, but it seems to me to be more convenient to represent favorable movements of the indices by rising indices. The formulae which follow are so constructed that a movement of any element in the formula favorable to the country in question operates to raise the index, and vice versa. [Italics in original.]

However, the opposite choice has often been made by economists studying international monetary, macroeconomic, and financial issues. This seems to have started with Obstfeld (1980, p. 463) who had "... the terms of trade, defined as the price of foreign consumption goods in terms of home goods." This was not his choice when writing with Rogoff in the definitive textbook of the field, Obstfeld and Rogoff (1996), who on p. 25 said "In general a country's terms of trade are defined as the price of its exports in terms of its imports." But the same two authors, writing later, reverted to p_M/p_X, as have many (but not all) authors in that subfield writing since.

But the term third world did not originally refer to geopolitics. The first to use it in its modern sense was Alfred Sauvy, a French demographer who drew a parallel with the "third estate" (the people) during the French revolution. In 1952 Sauvy wrote that "this ignored, exploited, scorned Third World, like the Third Estate, wants to become something, too." He was paraphrasing a remark by Emmanuel-Joseph Sieyès, a delegate to the Estates-General of 1789, who said the third estate is everything, has nothing but wants to be something. The salient feature of the third world was that it wanted economic and political clout.

I will concentrate here, therefore, on my first definition, "Same as multinational corporation, though for some reason this term seems to be preferred by those who don't like them." As for the first half of this, my search now for definitions mostly finds the two terms transnational corporation (TNC) and multinational corporation (MNC) to be alternatives for the same thing: a corporation that operates in more than one country.

A few authors do make a distinction between TNC and MNC, but on my reading they do not agree on what that distinction is. Oxford Reference, for example "contrasts" TNC with MNC, saying that while the former is controlled from a home country and has operations in many, the latter has multiple aspects, including control, that "span national boundaries." Another source says in one definition that a TNC has "global scope but no central headquarters," while still another seems to say the opposite: that MNCs have facilities in multiple countries and that "each operates as its own entity rather than forming the integrated network characteristic of transnational companies." Source

Robinson (1967, p. 154) may have been the first to carefully delineate the various forms of corporation in the international context, identifying fully six different "types": A=Domestic; B=Foreign oriented; C=International; and D=Multinational; E=Transnational; and F= Supranational. He distinguished MNCs and TNCs by a difference in "attitude":

Type E, the "transnational firm," becomes such when its members develop loyalty to the firm of a sort that transcends national identity, thus eliminating national bias in decision-making and making possible a geographically optimum allocation of corporate resources. Corporate headquarters itself becomes multinational in terms of personnel. Indeed, key decision-makers may, in fact, no longer reside in the parent country.

The first use I can find of the term transnational corporation was Carlston (1956). In a discussion of the role of international trade in "world society," he said (p. 93) "The transactions of international trade involve the meshing of a vast number of organisations, many of them of great size." He goes on to say (p. 94):

These transactions cannot be resolved into the simple, primitive patterns of conduct of individual buyers and sellers in a single market place; they take place through the functioning of corporate organisations cutting across State boundaries. These transnational corporations become a part of the national life in each of the countries in which they operate. Their employees are for the most part citizens of each such country and their economic product becomes statistically a part of the economic product of each such country. Yet, as a social system, the transnational corporation is a discrete organisation having a life of its own in that it embraces a series of functions all co-ordinated by a commonly accepted authority. In other words, 'international trade' is the product of institutionalised patterns of conduct primarily found centred in the transnational corporation and in other organisations of an established character.

I think it is fair to say that most of these early references to TNCs in the legal literature were not particularly critical of them. The one exception I came across was de Passalacqua (1968), a dissertation on international law that included only one mention of transnational corporations but noting a negative aspect of them (p. 155):

The development of the transnational corporation has introduced a problem closely resembling that of classical interventions. Under certain circumstances, such corporations are able to gain control of the country where they are carrying on their business.

I have not figured out a way to learn whether particular uses of the term transnational corporation include negative, positive, or neutral connotations without reading them in context, and I did that only through 1973, for which Google Scholar found 20 sources using the term. Of these, six had negative orientations. The numbers of sources mentioning it per year grew quickly, to 133 in 1980, 168 in 1990, 515 in 2000, and 1,130 in 2010. I have no easy way to learn what fraction of these used TNC with a negative connotation, nor to compare this with the uses of other terms such as MNC. My own statement, included in my Glossary definition, that TNC is preferred by those who view them negatively is still, therefore, just my own very subjective impression.

I like to conclude these notes on origins of terms with my judgement of who should get credit for introducing them. In this case, I cannot. The term may first have appeared in the legal literature with Carlston (1956), but as "transnational" was already a familiar and appropriate adjective in use, I have no reason to think that others were following him. I conclude that no particular person should be credited with the use of "transnational corporation," positive, negative, or neutral. I would, as always, welcome views and information from others on this.

Britain's token membership has in practice given support to the concept of two-tier Europe, two-speed Europe, variable geometry Europe -- call it what you will.

Exactly why one would speak of a "geometry," I don't know, but most likely it was prompted by the different shapes that maps of included countries would take if different countries participated in different agreements.

The basis for giving Smith (1776) credit (or blame) for the idea is the following passage, p. 240-1:

Between whatever places foreign trade is carried on, they all of them derive two distinct benefits from it. It carries out that surplus part of the produce of their land and labour for which there is no demand among them, and brings back in return for it something else for which there is a demand. It gives a value to their superfluities, by exchanging them for something else, which may satisfy a part of their wants, and increase their enjoyments.

Mill (1848, p. 579) was critical of this idea, which he viewed as a mercantilist mis-conception:

An extended market for its produce--an abundant consumption for its goods--a vent for its surplus--are the phrases by which it has been customary to designate the uses and recommendations of commerce with foreign countries. This notion is intelligible, when we consider that the authors and leaders of opinion on mercantile questions have always hitherto been the selling class. It is in truth a surviving relic of the Mercantile Theory....

Both the terminology and the criticism also appear in Mill (1874), in a discussion of Ricardo's treatment of trade, which Mill preferred:

Previously to his [Ricardo's] time, the benefits of foreign trade were deemed, even by the most philosophical enquirers, to consist in affording a vent for surplus produce, or in enabling a portion of the national capital to replace itself with a profit. The futility of the theory implied in these and similar phrases, was an obvious consequence from the speculations of writers even anterior to Mr. Ricardo.