most of these studies are partial , dealing with particular aspects of world trade . there is only one that I know of which tries to use the statistical information to formulate a model of world economic development and trade . this Professor Lewis did in 1952 , based on statistics for 1870-1950 , in terms of six world variables : world industrial production , world food production , world trade in manufactures , world trade in primary products , the price of primary products and the price of manufactures . the model , although attractively simple , fails to fit developments since 1950 partly because it makes one important assumption not borne out by events - the assumption that the ratio between world trade in primary products ( food and raw materials ) and manufactures would remain unchanged . in fact , one of the new features of the development of world trade since 1950 has been the rapid relative growth of world trade in manufactures and a corresponding relative fall in world trade in primary products . this relative fall is particularly marked if oil is excluded . the causes of this change have aroused great controversy , controversy which illustrates how difficult it is to interpret significantly this mass of statistical information . there is on the one side the argument , put forward strongly by the late Professor Nurkse , that the relative decline in world trade in primary products is mainly due to a fall in demand by industrial countries : a fall due to agricultural protection , a change in the structure of industrial production towards products using less raw materials and the substitution of synthetics for natural products . others , including Professor Cairncross , who spoke on this theme here a few months ago , have argued that one of the main factors inducing industrial countries to use less primary products was a shortage of supply , and that this shortage of supply was , to a substantial degree , the result of the economic policy followed by many primary producing countries . the analysis by GATT in successive reports on international trade since 1956 has tended to confirm this conclusion . GATT classified the non-industrial primary producing countries into two groups : ( 1 ) the semi-industrialised countries where industrialisation has already made substantial progress ( countries such as Argentina , India and Australia ) , and ( 2 ) the remaining non-industrial countries ; and then showed that the bulk of the relative fall in trade came in the first and not in the second group of countries . this seemed to lead conclusively to the view that reduced supply had at least been a very important contributory element in the relative reduction in world trade in primary products . but since then Mr A Maizels of the national institute has attempted to show that the results obtained by the GATT analysis are largely fortuitous and do not point to the conclusion which is drawn from them by the authors of the GATT reports . Mr Maizels shows that if exports of primary products from semi-industrialised countries are compared with world demand for the same commodities ( which he measures by world trade ) over the period 1937-38 to 1955 , then in most cases the semi-industrialised countries have maintained their share of the world total . from this he concludes that the relative fall in the trade of the semi-industrialised countries is due mainly to its commodity composition , and the fall in world demand for these commodities ; thus confirming the demand deficiency , rather than the supply deficiency , view . there is , however , one weakness in Mr Maizel &apos;s main calculations . in the case of some commodities a substantial part of the total of world trade is accounted for by the trade of the semi-industrialised countries . it is hardly surprising that in these cases exports from the semi-industrialised countries on average show much the same movement in volume as world trade as a whole . take wool as an example . this appears as an important export for four semi-industrialised countries - Argentina , Australia , New Zealand and the Union of South Africa . but the exports of these four countries between them account for the bulk of world export trade in wool . it is hardly surprising therefore that the export volume of wool from these countries , on average , approximates to the world total , some above and some below . the nearness of the world total and the figures for the four semi-industrialised countries can not be taken in this particular case to demonstrate the validity of the demand deficiency view . the same point applies to coffee , which appears as an important export of three semi-industrialised countries , Brazil , Colombia and Mexico , which between them account for a substantial part of world trade in coffee . indeed , one inevitably gets into difficulty if one has to use , as so often happens in analyses of world trade , the same figures as representing both world supply and world demand ; and when one begins to look at the position of individual semi-industrialised countries , Argentina for example , there seems strong evidence that there has been a reduction in the supply of primary products for export , and a substantial case for arguing that Argentinian economic and commercial policy has been an important element in this reduction . I would expect to find differences in the relative importance of changes in demand and supply from country to country , and suspect that any generalisation which attempts to settle this controversy in terms of general figures for world trade is likely to be too sweeping in ignoring the peculiar and divergent experience of individual countries . the other major feature of the statistics of world trade that has commanded great attention in recent years , is the rapid growth and changing character of world trade in manufactures . in the 1930&apos;s and during the war most of those who attempted to look ahead to future developments in world trade in manufactures were inclined to take rather a gloomy view . the traditional trade , especially in cotton textiles , was disappearing rapidly as domestic industries were being built up in the newly-developing industrial countries . and the opportunities for increased trade between the advanced industrial countries seemed likely to become restricted rather than wider as the character of their industrial development became more and more similar . in fact , world trade in manufactures has increased more rapidly than world industrial production compared with 1938 , the rise in European trade in manufactures being most remarkable and unexpected . now that we have a mass of regular statistical information , on a standard international classification , about this trade , we can examine its pattern and structure in great detail . familiarity with this statistical detail can no doubt give us a comfortable feeling that we know what is going on in international trade , which lines and markets are expanding or contracting . and we can pay particular care , as the board of trade does each quarter in the tables in the board of trade journal , to look at the fortunes of United Kingdom trade in this international competition . but I doubt very much myself whether the accumulation of statistics of this kind and the grubbing about among them for significant statistical trends by itself gives us much understanding of what is going on and the forces which are making for change . we need much more understanding and analysis of the forces that are behind the statistics . it may be , however , that the changes are the result of such a complex interaction of forces and that our analytical tools are so primitive that we can not yet hope to acquire this deeper understanding and will have to confine ourselves , for the time being at least , to the search for statistical trends which we hope will endure for some time . one of the main problems in understanding the significance of the shifting pattern of the world trade in manufactures is to be able to distinguish between changes in the fundamental forces in operation , and the time period which it takes for trade to adjust itself to those forces . take , for example , one of the major changes in British foreign trade over the last 50 years - the almost complete disappearance of the United Kingdom as a net exporter of cotton textiles . looking back now it could be argued that the fundamental forces which led to this change were already in operation in the years immediately after the first world war - the acquisition by Japan , India and other countries of the necessary technical and economic experience to enable them to develop efficient cotton textile industries of their own , and the consequential loss by Lancashire of the special comparative advantage that she had had in this field of manufacture for over a century . but although the fundamental forces had already changed by 1920 , it took many years for the full consequences to work themselves out . and because the process of adjustment took so long and was so slow , it was a long time before the change in the underlying situation was recognised . throughout the 1920&apos;s and 1930&apos;s it was still a widely held view that , given the appropriate re-organisation of the industry , Lancashire could regain her pre-1914 world trading position . it is obviously not easy to recognise powerful new economic forces affecting world trade when they first emerge . it is easier to treat the structure and pattern of world trade as relatively stable and unchanging until change makes itself clearly evident in the statistics . I have discussed very briefly only one or two examples of the way in which statistical information about world trade is used in an attempt to understand the main forces making for change . but these I think are quite typical and , unfortunately , do not lead to the clear conclusion that this new approach is leading to great enlightenment . it is , I take it , hardly necessary for me to sum up my view that we are still far from having , either in theory or in statistical analysis , techniques which enable us to explain satisfactorily the main features of international trade . many of you will no doubt think that I take too gloomy and sceptical a view . but in this field of economics , as in many others , however complex our theoretical and statistical models may be , I am impressed , perhaps over-impressed , by their relative crudity and simplicity compared with the intricacy and complexity of the real world . a simple model of employment , money and prices in a growing economy . by A W Phillips . 1 . introduction . the purpose of this article is to develop a simple aggregative model which may be used to study both the problem of reducing short-period fluctuations of an economy and the problem of attaining longer-term objectives relating to employment , the price level and growth . to do this the Keynesian model of employment , interest and money is extended in a number of ways . the concept of normal capacity output is introduced , with the hypothesis that normal capacity output increases continuously as a result of investment in improving productive resources . actual output is then expressed as a proportion of normal capacity output . the rate of change of the price level is assumed to depend on the ratio of actual output to normal capacity output and on the rate of change of productivity . the rate of interest is assumed to depend on the quantity of money , actual output and the price level . investment demand is made a function of the ratio of actual output to normal capacity output , the expected rate of growth and the rate of interest . by defining some variables in the model to be either logarithms or ratios of the usual economic variables , assuming continuously distributed time lags in the behaviour relations and making certain linear approximations , which should be satisfactory for moderate fluctuations in output and employment , the model can be written as a system of linear differential equations . the steady state solutions give the paths of the variables in conditions of steady or equilibrium growth and in particular show the long-run relations between the rate of change of the quantity of money , the ratio of actual to normal capacity output , the rate of change of the price level and the rate of growth of normal capacity output . the transient solutions , which show deviations from , or short-period fluctuations about , the growth equilibrium paths , are used to investigate the stability of the system and the effect of a stabilisation policy . 