You seem to be confusing Terms of Trade with exchange rates.
Nice try, but I do mean exchange rates, just as these folks mean exchange rates:
| ftp://ftp.usitc.gov/pub/reports/studies/PUB3110.PDF PDF page 33 Finally, Hines (1996b) argues that exchange rates move to reflect international differences in goods prices. Thus any increase in export competitiveness caused by a move to destination basis would ultimately be offset by appreciation of the U.S. dollar. Another line of reasoning is that countries use receipts from exports either to import immediately, or to make investments abroad which ultimately provide income to pay for a larger volume of imports in the future. Both of these arguments are based upon the observation that strong economic forces keep a country’s trade in approximate balance regardless of what other policy changes it may undergo. The likelihood that the change from an origin-based system to a destination-based system would in fact generate incentives to export and disincentives to import ultimately depends on the strength with which the long-run tendency toward balanced trade in fact operates. Grubert and Newlon (1995 and 1997) point out that a destination-based consumption tax does create an incentive for cross-border shopping, if goods can be reentered tax free, and for consumption abroad through travel or emigration. Finally, the ultimate effect of a flat consumption tax on the price of particular goods will depend on demand elasticities. Those goods for which demand is relatively inelastic may be able to pass through a larger price increase (tax inclusive) to purchasers than those with elastic demands.29 Whether this would happen in specific cases would depend, among other things, on the price behavior of production inputs and competing products. |
The rest of your statements has nothing to do with my discussion and seems to be based upon confusion as to who introduced certain elements into the discussion.
Hmm, seeing as each response was in regard you own specific statements to me, the only factors introduced are hardly a basis of such confusion, and indeed were directed at the discussion as you framed it to that point.
Terms of Trade = "The conditions under which a nation carries on foreign trade, with reference particularly to the question whether such conditions are favorable or unfavorable." Dictionary of Economics
You are speaking of changing those conditions by making them more favorable.
Your excerpt should be read throughly with particular attention to the admission that elasticities will determine the effect of a FT. It does not support your view as much as you might hope.