Campus Units

Economics

Document Type

Article

Publication Version

Published Version

Publication Date

9-1978

Journal or Book Title

The American Economic Review

Volume

68

Issue

4

First Page or Article ID Number

601

Last Page

613

Abstract

The emergence of the portfolio balance approach 1 has led to a reformulation of the causes of balance-of-trade and payments disequilibria. According to this approach, balance-of-trade deficits and surpluses reflect discrepancies between desired and actual wealth holdings; while balance-of­ payments deficits and surpluses reflect discrepancies between desired and actual money holdings. Thus, balance-of-trade and payments disequilibria are viewed as representing disequilibria within the asset markets. Using this framework several authors2 have examined the self-correcting nature of disequilibria within the balance­ of-payments accounts and the ability of a devaluation to reduce the magnitude of a disequilibrium.

Comments

This is an article from The American Economic Review 68 (1978): 601. Posted with permission.

Copyright Owner

American Economic Association

Language

en

File Format

application/pdf

Share

COinS