Trade, Money and International Payments

Paul Davidson

Chapter 5 in International Money and the Real World, 1992, pp 85-104 from Palgrave Macmillan

Abstract: Abstract The items in the balance of payments are interconnected via the system of double-entry book-keeping so that, for example, a positive overall balance on the current account must be offset by a negative balance on the capital account. It is essential for clear analysis to deal with imbalances in one subset of accounts at a time. Traditionally, economists have delved primarily into what happens when an adverse balance of trade develops,1 that is when a nation generates a tendency towards a persistent import surplus. The immediate problem for a nation in this condition is how to finance the imbalance in its international payments. This, then, is the problem we shall analyze in some detail.2

Keywords: Trading Partner; Trade Deficit; Liquid Asset; Marginal Propensity; International Money (search for similar items in EconPapers)
Date: 1992
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DOI: 10.1057/9780230378094_5

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