Price–specie flow mechanism

The price–specie flow mechanism is a model developed by Scottish economist David Hume (1711–1776) to illustrate how trade imbalances can self-correct and adjust under the gold standard. Hume expounded his argument in Of the Balance of Trade, which he wrote to counter the Mercantilist idea that a nation should strive for a positive balance of trade (i.e., greater exports than imports).

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