Page:Stabilizing the dollar, Fisher, 1920.djvu/254

200 we shall assume that only two thirds of the influence from the adjustment is felt within the first adjustment period of two months and that the remaining third is felt in the ensuing period.

We shall assume the brassage to be 1%. Probably 1½% or possibly 2% would be better, but the above examples and various other calculations applied to the actual price tendencies in the period mentioned show substantially the same degree of closeness to par under brassage charges varying from 1% to over 4%.

We shall assume that (except where limited by the brassage) the adjustment of the dollar's weight is 1% for every 1% deviation from par of the index number, and that the influence of this on the index number is 1% for each 1% adjustment.

These assumptions may be put in the following form:

(1) Brassage: 1%.

(2) Adjustment: 1% for each 1% of deviation from par of the index number (subject to the condition that no one adjustment shall exceed 1%, the amount of the brassage).

(3) Influence: 1% for each 1% of adjustment in weight of the dollar.

(4) Lag: ⅔ of this influence felt within the first adjustment interval of two months and the remaining ⅓ in the second adjustment interval.

(5) Tendency: What it actually was according to the index number of the United States Bureau of Labor Statistics between 1900 and the present.

Assumption (5) means that, instead of considering purely hypothetical cases, we are now to study what would have happened if we had had stabilization started January, 1900.

This affords a very severe test; for the period taken