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The Two Monetary Approaches to the Balance of Payments: Keynesian and Johnsonian
Author:
J. J. Polaknull

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Series:
IMF Working Papers
Volume/Issue:
Volume 2001: Issue 100
Language:
English
Publication Date:
01 Aug 2001
DOI:
https://doi.org/10.5089/9781451852400.001
ISBN:
9781451852400
ISSN:
1018-5941
Pages:
26
Keywords:
WP; balance of payments; money supply; interest rate; Monetary approach to the balance of payments; monetarism; IMF; money income; balance-of-payments effect; balance of payments position; propagation period; extent credit creation; money identity; balance of payments equation; Personal income; Credit; Monetary base; Demand for money; Imports
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper emphasizes the distinction between two ‘monetary approaches to the balance of payments’, one developed in the IMF, the other under the leadership of Harry Johnson in Chicago. The IMF approach is presented as an evolutionary development of the Kahn/Keynes multiplier model in an open economy. Johnson’s approach is anti-Keynesian and self-proclaimed revolutionary. It posits the ‘essentially monetary character’ of the balance of payments. The IMF model tests satisfactorily as an explanation of income and imports over time. The long-run equilibrium approach of the Chicago model precludes statistical testing, and its short-run tests prove statistically meaningless.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2001: Issue 100