- International Monetary Fund
- Published Date:
- September 1977
The Monetary Approach to the Balance of Payments
A Collection of Research Papers by Members of the Staff of the International Monetary Fund
INTERNATIONAL MONETARY FUND
WASHINGTON, D.C. 1977
International Standard Book Number: ISBN 1-55775-277-X
Fifth printing 1992
$10.00 (or the equivalent
in most other currencies)
International Monetary Fund
The Monetary approach to the balance of payments; a collection of research papers by members of the staff of the International Monetary Fund. Washington, D.C., 1977.
“Seven of the studies originally appeared in the Fund’s economic journal, Staff Papers, in the period from 1957 to 1973.... ”
1. Money. 2. Balance of international payments. I. Title.
THIS VOLUME brings together the most important research papers on the monetary approach to the balance of payments published by the staff of the International Monetary Fund. These papers, reprinted here in their original form, were written over a period of almost two decades. They record the important contribution made by the Fund’s staff to the early development of the monetary approach, which has now come to be widely accepted by academic economists and policymakers.
When the Fund began its operations, just after World War II, balance of payments analysis was still much less developed than it is today. In pursuing one of the primary tasks assigned to the Fund, that of assisting member governments in their efforts to shorten the duration and lessen the degree of disequilibrium in their international balances of payments, the staff was thus faced with the need to adapt existing theories, to develop new approaches, and to experiment with novel analytical procedures. Fortunately, the Fund was uniquely placed to meet the challenge: it was operating under an international agreement giving it well-defined financial and regulatory responsibilities; it quickly became the repository for a vast amount of national and international economic data; and it was in continuous consultation with technicians and policymakers in member governments. Not least important was the fact that the Fund possessed a highly qualified professional staff, blending theoretical understanding with a sense for the practical and enthusiasm with experience.
Much unpublished research work, in the form of internal memoranda and seminars held within the Fund, preceded the publication of the articles collected here, and all the contributors to this volume would, I am sure, wish to acknowledge their debt to colleagues on the staff of the Fund, past and present, for counsel and assistance.
April 8, 1977
H. JOHANNES WITTEVEEN
International Monetary Fund
List of Contributors and Acknowledgments
All the studies in this volume were prepared by members of the staff of the International Monetary Fund. The views expressed are those of the authors and do not necessarily reflect the views of the Fund. The contributors are as follows:
Bijan B. Aghevli, a graduate of Brown University, has been on the staff of the Fund since October 1972. He is an economist in the Asian Department.
Victor Argy, a graduate of the University of Sydney, was on the staff of the Fund from December 1967 until October 1972, when he was the Chief of the Financial Studies Division of the Research Department. He has taught at the University of Auckland, New Zealand, and at the University of Sydney. In 1977, he was on leave from Macquarie University in Australia and served as a consultant to the Fund.
Lorette Boissonneault, a graduate of George Washington University, was an economist in the Research Department of the Fund from December 1946 until her retirement in December 1969.
J. Marcus Fleming, a graduate of Edinburgh University, was on the staff of the Fund from February 1954 until his death in February 1976. At the time of his death, he was Deputy Director in the Research Department. He had taught at Columbia University.
Manuel Guitian, a graduate of the Universities of Santiago (Spain), Madrid, and Chicago, has been on the staff of the Fund since October 1970. He is Acting Chief of the External Finance Division of the Exchange and Trade Relations Department.
H. Robert Heller, a graduate of the University of Minnesota and the University of California at Berkeley, has been on the staff of the Fund since June 1974. He has taught at the University of California at Los Angeles and at the University of Hawaii. He is the Chief of the Financial Studies Division of the Research Department.
Mohsin S. Khan, a graduate of the London School of Economics and Political Science and of Columbia University, has been on the staff of the Fund since September 1972. He is an economist in the Research Department.
J. J. Polak, a graduate of the University of Amsterdam, has been on the staff of the Fund since January 1947. He is the Economic Counsellor and Director of the Research Department.
S. J. Prais, a graduate of the Universities of Cambridge and Birmingham, England, was an economist in the Research Department of the Fund from March 1960 until March 1961. Presently, he is Senior Research Fellow at the National Institute of Economic and Social Research, London, and Visiting Professor at the City University, London.
Rudolf R. Rhomberg, a graduate of the University of Vienna and of Yale University, has been on the staff of the Fund since September 1959. He has taught at the University of Connecticut and at Yale University. He is Senior Advisor in the Research Department.
The studies in this volume, except for “Introductory Survey” (Chapter 1), are presented in the chronological order of their first publication. Seven of the studies originally appeared in the Fund’s economic journal, Staff Papers, in the period from 1957 to 1973; one study, “Money, Income, and the Foreign Balance” (Chapter 6), was originally in the form of a paper presented to the Nyasaland Economic Symposium, held in Blantyre July 18-28, 1962, and is reproduced from Economic Development in Africa by the kind permission of Basil Blackwell (Oxford, England); and three studies (Chapters 1, 10, and 11) are being published for the first time. The studies were selected for the present volume by Mr. H. Robert Heller; production of the volume was supervised by Miss Mary Ellen Lucas.
- List of Contributors and Acknowledgments
- 1 Introductory Survey
- RUDOLF R. RHOMBERG and H. ROBERT HELLER
- 2 Monetary Analysis of Income Formation and Payments Problems
- J. J. POLAK
- 3 Monetary Analysis of Income and Imports and Its Statistical Application
- J. J. POLAK and LORETTE BOISSONNEAULT
- 4 Money Supply and Imports
- J. MARCUS FLEMING and LORETTE BOISSONNEAULT
- 5 Some Mathematical Notes on the Quantity Theory of Money in an Open Economy
- S. J. PRAIS
- 6 Money, Income, and the Foreign Balance
- RUDOLF R. RHOMBERG
- 7 Monetary Variables and the Balance of Payments
- VICTOR ARGY
- 8 Credit Policy and the Balance of Payments
- J. J. POLAK and VICTOR ARGY
- 9 Credit Versus Money as an Instrument of Control
- MANUEL GUITIAN
- 10 The Determination of the Balance of Payments and Income in Developing Countries
- MOHSIN S. KHAN
- 11 The Monetary Approach to Balance of Payments Determination: An Empirical Test
- BIJAN B. AGHEVLI and MOHSIN S. KHAN